The UK faces a renewed energy crisis following the war in Iran, which has already caused wholesale gas prices to rise by around 50% since the invasion. This surge is likely to eliminate the £150 energy bill reduction announced in November 2025, and prices could get much worse.
While targeted financial support is vital for households in need, the government’s priority must be to reduce oil and gas demand without reducing the useful energy people consume.
This note proposes a strategic response centred on accelerating energy efficiency measures and speeding up the adoption of electric heating technologies in the home.
Reducing reliance on fossil fuels will limit the impact on energy bills, protect consumer spending, and strengthen the UK’s economic and fiscal resilience against future energy shocks.
What’s in the policy brief?
The brief details a three-point plan for government action to respond to the energy crisis, focusing on domestic energy bills.
- A big push on low-cost energy efficiency measures ahead of winter. This includes promoting 10 low- or no-cost actions – such as turning down boiler flow temperature, washing laundry at lower temperatures, and draught proofing – that could save millions of households at least 10% off their energy bills.
- Speeding up electrification over the summer. The note highlights that switching to electric technologies like heat pumps is essential for gas use reductions, as heat pumps use around 3.5 times less energy than a gas boiler to produce the same heat.
- Using the crisis to lock in energy bill stability in the long term. The report argues for fundamental changes to how energy bills are charged to prevent future crises.
Recommendations
The government must use this crisis as an opportunity to accelerate energy independence and lock in long-term stability by fundamentally reducing reliance on fossil fuels. The key recommendations are outlined below.
- Launch a national energy efficiency advice campaign: working with delivery partners, UK government should creatively and vigorously promote low- and zero-cost energy efficiency measures – supported by incentives like expanding zero VAT to DIY insulation materials – to achieve rapid savings for millions of households before winter and emergency measures to shift electricity demand away from peak periods.
- Accelerate electrification: take urgent steps this summer – a period when engineers are less busy – to boost installer capacity via schemes like Nesta’s Start at Home, temporarily increase the Boiler Upgrade Scheme (BUS) grant and fuel poverty schemes, remove costs from electricity bills, urgently remove planning constraints for heat pumps and solar, and promote air-to-air heat pumps.
- Guarantee long-term energy bill stability: set a long-term target that the ratio of electricity-to-gas prices should not exceed 2.9. This is crucial to ensure that switching from a gas boiler to a heat pump is cheaper on lifetime costs. The government should also consider a gas price stabiliser, introducing a ceiling (e.g., 10p/kWh) and floor (e.g., 5p/kWh), to smooth price volatility and build reserves against future crises.
