Poorest households in coldest homes have lost two-thirds of support to reduce energy bills

The chancellor’s decision to cut green levies will mean the poorest households living in the coldest homes will have lost two-thirds of the support they were due to receive for energy-efficiency measures, according to analysis from the New Economics Foundation (NEF). 

At the autumn budget today, the chancellor announced the government would reduce household energy costs through scrapping the Energy Company Obligation (ECO) scheme, which required energy companies to provide low-income households with energy efficiency measures, and reducing the Renewables Obligation (RO).

Researchers have found this will save households earning under £30,000 around £100. But their bills could have fallen by almost treble this amount (£290) if they had been eligible for the ECO scheme. 

Meanwhile, households earning over £80,000 will see their bills cut by £143 under the measures announced today. 

Researchers have warned the move will leave poorer households unable to afford the energy-efficiency measures that will bring down bills in the long term and help to reduce emissions. 

Chaitanya Kumar, head of economic and environmental policy at NEF, said:

“Removing the RO costs from bills will help in the short term, but the chancellor is wrong to say the ECO scheme costs more than it saved. The problem is a broken retrofit supply chain and not the principle of helping people cut their energy bills for the long term.

“By cutting £6.4bn of ECO support and replacing it with a £1.5bn fund, the budget potentially leaves thousands of low-income households stranded in cold, inefficient homes and denies them the permanent savings that energy-efficiency reliably delivers.”

ENDS

Notes

We take the Ofgem energy price cap breakdown Oct 2025-Dec 2025 as our baseline and use that to estimate the median household energy bill across ten income bands using Smart Energy Research Lab (SERL) survey (2023) consumption data. The government’s estimates on RO and ECO savings will come into effect from April 2026, when the price cap is expected to have increased and thereby the savings. Our bill savings estimates are therefore slightly lower than official government estimates.

Foregone ECO savings from home retrofit measures will only apply to those eligible from the scheme and we take the estimate from the ONS Household Energy Efficiency Statistical Release 2021 that the average ECO saving in the first year is £290.

We estimate ECO eligibility by identifying households in receipt of social security payments above £20 weekly (not including state pension) in the ONS living costs and food survey (LCFS) 2023 – 2024 dataset and adjust that against households in EPC bands D‑G from the English Housing Survey (EHS), specifically from table DA7103. This gives us an approximate distribution of households that we deem eligible for ECO across our income bands.

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