The headline is good news for the Chancellor: UK inflation slowed to 2.8% in April, down from 3.4% in March. The Bank of England will breathe easier. But for the 11 million households on a standard variable tariff, the number that matters isn’t 2.8% – it’s £1,690. That’s the annual bill for a typical dual-fuel customer under the current price cap, set by Ofgem and in effect since 1 April.
As Arise News reports, the easing of the energy cap – down from £1,928 in the previous quarter – was the single biggest factor pulling inflation lower. But the cap is still 40% above its pre-crisis level of around £1,200 in 2021. And for homeowners on a default tariff who haven’t switched, the cap is not a ceiling: it’s the price of doing nothing.
What the inflation figure means for your energy bill
Inflation measures the rate of price change, not the level. So while the rise in energy costs has slowed, the absolute amount you pay is still historically high. Ofgem’s cap applies to unit rates and standing charges, not total consumption. A typical 3-bed semi using 12,000 kWh of gas and 2,900 kWh of electricity will pay about £1,690 a year. But that’s the cap – many households on fixed deals that expired last year are paying more, and the cheapest fixed tariffs on the market are currently around £1,500, according to comparison sites. The gap between the cheapest and the cap is roughly £200 a year, or £17 a month. That’s not a fortune, but it’s a sum worth chasing.
Who qualifies – and who doesn’t
The cap applies automatically to customers on standard variable tariffs. But it does not apply to pre-payment meter customers, who have a separate cap (currently £1,643 a year) or to those on economy 7 or other time-of-use tariffs. And importantly, the cap does not protect you from high consumption. A draughty home that leaks heat will still rack up a big bill, even at capped unit rates. That’s why the Energy Saving Trust recommends a fabric-first approach: loft insulation (costing £300–£500 for a typical semi, saving £200 a year), cavity wall insulation (£400–£700, saving £250 a year), and draught-proofing (£100–£200, saving £50 a year). These measures pay back in two to three years and improve your EPC rating by at least one band.
What it costs a typical 3-bed semi
Let’s be concrete. A 3-bed semi with an EPC rating of D (band 56–68) uses about 15,000 kWh of gas and 3,500 kWh of electricity per year. At the current cap, that’s roughly £1,900 a year. Upgrade to a C rating (69–80) with loft insulation, cavity fill, and double glazing, and annual consumption drops to about 11,000 kWh gas and 2,800 kWh electricity – a bill of around £1,400. That’s a saving of £500 a year, every year, for the life of the house. The upgrades cost about £2,000–£3,000 total, meaning a payback period of four to six years. And if you add a heat pump (costing £7,000–£13,000 after the £7,500 BUS grant), you can cut gas consumption to zero, saving a further £400–£600 a year on gas, though electricity use will rise slightly. Solar panels (costing £5,000–£8,000 after VAT reduction) can offset that extra electricity, especially if you use a battery to store daytime generation.
The catch: grants are finite and time-limited
The Boiler Upgrade Scheme has funded about 60,000 heat pump installations since 2022, but applications are capped at 50,000 per year and the grant is set to reduce to £7,000 after 2025. The Great British Insulation Scheme, launched in 2023, has a budget of £1 billion and is open until March 2026. But uptake has been slow – only 20,000 homes treated in the first year, according to government data. Meanwhile, the Energy Company Obligation (ECO4) continues to fund free or heavily subsidised insulation for low-income households. The message is clear: if you’re a homeowner with a gas boiler and a draughty house, the cheapest time to act is now. The next inflation reading, due in June, will show whether energy prices stay flat or rise again. Ofgem will announce the next cap on 27 May, with analysts at Cornwall Insight predicting a slight increase to £1,720 from July. That’s not a crisis, but it’s not relief either.
What you should do by when
First, check your current tariff. If you’re on a standard variable rate, compare fixed deals on Ofgem-accredited sites. Second, book a free home energy assessment from your local authority or a certified retrofit assessor. Third, apply for grants: the Great British Insulation Scheme (gov.uk/gbis) for insulation, the Boiler Upgrade Scheme (gov.uk/boiler-upgrade-scheme) for heat pumps, and the ECO4 scheme (via your energy supplier) if you’re on a low income. The window for the heat pump grant closes in 2025, and the insulation scheme in 2026. Do it this summer, before the next cap rise hits in October.
Frequently Asked Questions
The cap limits the unit price you pay for gas and electricity, but not your total bill. If you use more energy, you pay more. The best protection is to reduce your consumption through insulation, draught-proofing, and efficient heating. The cap is a safety net, not a solution.
A heat pump can cut your gas bill to zero, saving £400–£600 a year on gas, though electricity costs rise by about £100–£200. Solar panels with a battery can offset that extra electricity, saving a further £200–£400 a year. Total annual savings from a full retrofit (insulation + heat pump + solar) can reach £800–£1,200, with payback in 8–12 years after grants.
