The headline news from the recent UK Budget announcement is out: the average household is set to see their energy bill drop by £150. While this is welcome news for everyone, the headlines don’t tell the full story.

If you are a homeowner currently considering a heat pump, or if you have already made the switch to electric heating, the news is actually much better than the average suggests.

We’re digging a bit deeper into the numbers to explain why this budget definitely favours those moving toward clean heating. This is based on our experiences helping homeowners and with credit to Nesta for their speedy analysis. 

The £150 saving figure quoted in the media is an average across all households, including those heating with gas. However, the main mechanism for the headline saving is the removal of levies from electricity bills.

Because the savings are coming directly off electricity costs, households that rely solely on electricity for heating will see a bigger benefit. Based on the new budget figures:

• Heat Pump Owners: You are likely to save £200 per year.
• Storage Heater Users: savings of £250.

The Chancellor has moved to favour clean, electric heating over fossil fuels.

Busting the “Gas is Cheaper” Myth

A common argument we hear against heat pumps goes like this: “Electricity is four times more expensive than gas. Since a heat pump is roughly 350-400% efficient, you’re just breaking even.”

This math is missing two critical factors that change the equation entirely.

1. Gas Boilers Are Not 100% Efficient

When people compare prices, they assume their gas boiler is converting 100% of that fuel into heat. In reality, gas boilers are inefficient.

• The very best boiler set ups are roughly 90–93% efficient.
• 83% efficient is typical.
• Some can be as low as 70%.

You aren’t comparing 100% gas efficiency against 350% heat pump efficiency. You are comparing a wasteful 70–80% gas efficiency against a highly efficient heat pump. 

If you switch to a heat pump and remove your gas hob (going fully electric), you can cap your gas supply entirely. This removes the Gas Standing Charge from your bill, which is currently worth about £120 a year. That is an immediate, permanent annual saving that many calculations forget to include.

The Secret Weapon: Time-of-Use Tariffs

The budget headlines are based on standard variable rates. However, most savvy heat pump owners don’t stay on standard rates; they switch to Time-of-Use tariffs (enabled by smart meters).

These tariffs function like a modern kind of Economy 7, offering cheaper electricity rates overnight (e.g., 1:00 AM to 5:00 AM) and sometimes during mid-morning or mid-afternoon.

With a well-performing heat pump, you can “store” heat in your building fabric and hot water tank during these cheap periods. This allows you to avoid using electricity during the expensive peak periods (tea time/early evening), which is coincidentally when the grid is “dirtiest” with fossil fuels.

Making the Switch with Confidence

There is a lot more the UK and Scottish governments could do but the economics are looking better:

• Electricity levies are dropping.
• The gas standing charge can be eliminated.
• Smart tariffs maximize savings.
• Heat Pump Grants are continuing.

However, moving from a gas boiler to a heat pump is a significant project. To maximize your savings, you need a well-performing system, a great installer, and a plan that integrates well with improvements to insulation and ventilation.

Don’t Navigate This Alone

If you want peace of mind, wish to avoid installation delays, and need to ensure you are maximizing available funding (including Home Energy Scotland grants), you need independent expert support.

Local Home Retrofit is here to help. Whether you need a specific Heat Pump Plan or a comprehensive Whole Home Plan, we guide you through the process to ensure your retrofit is a success.

Contact Local Home Retrofit today to start your plan

As an intermediary, Loco Home helps Scottish households, tradespeople and professionals to navigate the often complex, disruptive and expensive process of retrofitting our homes. Many of us may wish to reduce our energy bills and reject fossil fuels but may be held back by a lack of knowledge about where to start. Loco Home Retrofit is here to demystify the retrofitting process and support homeowners in enacting energy efficiency measures in their homes.

Read an article about us in the Glasgow Times: https://www.glasgowtimes.co.uk/news/25231738.loco-home-helps-glaswegians-avoid-green-energy-scams/

• ScotGov shouldn’t Be Waiting for Westminster to take action on cold homes 
• How To Heat your Home Efficiently: The Ultimate Guide To Lowering Bills
• Moving Beyond “Fabric First”: A Pragmatic Approach to Scottish Decarbonisation
• Loco home retrofit Impact Report 2025
• UK Budget Update: Why the Numbers Stack Up for Heat Pump Owners