The Government’s heat pump rollout is being “fully or partially funded” by British taxpayers, according to energy market experts. Heat pumps are widely viewed as an environmentally-friendly alternative to traditional gas boilers which have been pushed by both Labour and Conservative ministers.
Policymakers, including Ed Miliband, have claimed energy bills will fall long-term once the UK adopts a more green agenda. However, official figures published by the Government have revealed that this push towards net zero is being financially propped up by initiatives, such as the Boiler Upgrade Scheme.
Under this taxpayer-funded subsidy, households can claim up to £7,500 per air source heat pump or £5,000 per biomass heat pump. This grant is available goes towards the cost of converting a property away from a fossil fuel heating system.
Figures for 2024 show that up to the end of September at least 85 per cent of heat pumps installed under the Government’s accreditation scheme (MCS), around 29,901 units, were fitted through tax or levies on energy bills.
Notably, the Boiler Upgrade Scheme made up 15,330 installs across Britain. Retrofits through the Energy Company Obligation (ECO) scheme, which were funded via energy bills, accounted for 13,409 installs.
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New analysis suggests that the Government’s heat pump rolled out is being ‘fully or partially funded’ by the taxpayer
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The ECO is a programme that requires firms to install energy efficiency measures in homes. To benefit from this scheme, homes need energy efficiency upgrades. A retrofit assessment can determine what measures would be best for your home. Beneficiaries must either own the home or have permission from your landlord.
Up to the end of September, there were 35,175 air source heat pumps fitted under the MCS accreditation scheme, according to the Energy and Utilities Allowance’s (EUA) analysis of Government figures.
Mike Foster, the CEO of the non-profit organisation, is sounding the alarm that the reliance of tax money to keep the heat pump industry afloat is concerning long-term.
He explained: “The UK heat pump market is growing year on year, unlike many countries in Europe where the opposite is the case, but the market is still fragile. It is relying on public subsidies to sell the products. This cannot continue, especially in a fiscally constrained political environment.”
“The stark facts remain, they cost too much to fit and cost more to run than a gas boiler. Unless this changes, the market for heat pumps will remain fragile. And it is not sensible to make boilers more expensive or increase the cost of gas, with 23 million users, just to make heat pumps attractive for a few thousand people.”
“We can see in Europe that when the subsidies disappear, heat pump sales plummet. Boom and bust is no way to sustain this industry. If we can’t afford to heavily subsidise all heat pump installations, for all homes, then we need to look again at the roadmap for net zero homes.”
“Let’s hope the Warm Homes Plan next year recognises this new reality and approaches domestic decarbonisation through the prism of the real world and not that of the all-electric zealots.”
As part of the the Warm Homes Plan, Labour hopes to deliver home upgrades to up to 300,000 households over the next year which will ideally bring gas and electricity costs down.
Included in this updated agenda is boosting the budget for the Boiler Upgrade Scheme to support more households switching to a heat pump. The Government claims families could save around £100 a year compared to a gas boiler by using a smart tariff effectively.
Furthermore, funding is being put towards insulating more homes across the country which analysis claims could see homeowners make potential savings of around £200 per year.
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Heat pump targets are costing the taxpayer, according to experts
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Last month, Miatta Fahnbulleh, Labour’s Minister for Energy Consumers, shared the Government’s vision for cutting costs and rolling out green technologies in homes.
The energy minister explained: “The idea at the heart of our Warm Homes Plan is a simple one – all families deserve the security of a home they can afford to heat.
“But for too long, that has been out of reach for far too many people who have been left with draughty homes and sky-high bills. That is why we are taking immediate action today to make cleaner heating available to more households.
“This follows our plan to lift over one million households out of fuel poverty by consulting on boosting minimum energy efficiency standards for all renters by 2030, delivering warmer homes and cheaper bills.”
