The price cap will rise by £63 in October, the third increase this year. A typical household on standard variable tariffs will pay £1,762 annually from October, up from £1,699 in July. That’s £63 more for the same gas and electricity, with no improvement in efficiency or comfort.
The Institute for Government’s latest report, as reported by the Institute for Government, pins the blame squarely on government policy failures. The report argues that successive administrations have failed to insulate homes, expand renewables fast enough, or stabilise wholesale markets. The result: UK households pay some of the highest electricity prices in Europe, and the gap is widening.
Who pays for policy failure
The report calculates that the average household has paid an extra £300 per year since 2021 because of delayed insulation programmes and botched energy market reforms. That’s £300 that could have gone into home improvements, savings, or simply staying warm. The government’s Energy Company Obligation (ECO) scheme, which funds free insulation for low-income homes, has been repeatedly redesigned, each time losing momentum and leaving thousands of homes untreated.
Ofgem’s own data shows that network charges, the cost of pipes and wires, make up about 25% of a typical bill, or roughly £440 a year. These are largely fixed costs, but they rise with inflation. The Institute for Government notes that policy costs, including subsidies for renewables and social programmes, add another 15% to the bill. The total policy burden on a typical household is now around £270 a year, and rising.
What this means for your EPC rating
Energy Performance Certificate ratings are directly tied to energy costs. A home rated EPC C typically costs £1,200–£1,500 a year to heat and power. An EPC D or E can cost £2,000 or more. With bills rising, the gap between a well-insulated home and a draughty one widens. The government’s target is for all homes to reach EPC C by 2035, but at current rates of installation, the Institute for Government estimates it will take until 2045.
Households that act now can lock in lower bills. A typical cavity-wall insulation costs £500–£1,000 and saves about £200 a year. Loft insulation, costing £300–£600, saves £150 a year. Combined, these measures pay back within three to five years. Heat pumps, which cost £7,000–£13,000 after the Boiler Upgrade Scheme grant, can cut heating bills by 20–30% compared to a gas boiler. Solar panels, at £5,000–£8,000, can reduce electricity bills by 50% or more.
Grants and timelines: what’s available now
The Boiler Upgrade Scheme offers £7,500 off a heat pump installation. The Great British Insulation Scheme provides free or subsidised insulation for low-income homes. The ECO4 scheme targets the most energy-inefficient properties. Applications are open now, but funds are limited. The Institute for Government warns that the current pace of grant distribution is too slow to meet targets, with only 30,000 heat pumps installed in 2024 against a target of 600,000 by 2028.
But… the catch is that many homeowners do not know they qualify. A 2024 survey by the Energy Saving Trust found that 60% of eligible households had not applied for any grant. The application process is fragmented across multiple schemes, each with different eligibility criteria. The government has promised a single online portal by 2026, but that is two years away.
What to do now
Households on standard variable tariffs should check their EPC rating online at gov.uk. If it is D or below, call the Energy Saving Trust on 0800 444 202 for a free eligibility check. Insulation grants are available now, but the window may close as funds run out. For heat pumps, the £7,500 Boiler Upgrade Scheme grant is guaranteed until March 2028, but installers are booking months ahead. Book a survey now to secure a slot.
Frequently Asked Questions
Ofgem reviews the price cap every three months. Analysts expect further increases in January 2026 due to rising wholesale gas prices and network costs. The Institute for Government report suggests that without policy reform, bills could exceed £2,000 by 2027.
The fastest way is to check your EPC rating and apply for insulation grants. Cavity wall and loft insulation can be installed in a day and save up to £350 a year. The Great British Insulation Scheme offers free installation for eligible households.
