Heat pump subsidies in the UK are set to be slashed as ministers seek to fund higher defence spending, sources have revealed. The boiler upgrade scheme (BUS) for England and Wales, which offers grants of up to £9,000 for households switching to cleaner heating, faces cuts of hundreds of millions from its £2.7bn budget.
Why Are Heat Pump Subsidies Being Cut?
The government is under pressure to find over £2bn in savings from the energy department's budget to pay for defence investment. Energy secretary Miatta Fahnbulleh has been tasked with identifying these savings, and a portion will come from reducing the BUS budget. Treasury officials have long viewed the scheme as a subsidy used mainly by middle-class households, despite its role in helping tens of thousands install electric heat pumps.
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Impact on Households and Industry
The cuts will make it more expensive for homeowners to switch from gas boilers to heat pumps, potentially slowing the UK's transition to renewable heating. Critics argue that cutting the scheme will damage the nascent British heat pump industry and undermine the government's climate commitments. Madeleine Gabriel of Nesta said: "Bills are soaring again because of high gas prices. Our reliance on gas is the reason we are in an energy crisis, so cutting funding for heat pumps makes no sense."
Key Takeaways
- Heat pump subsidies under the boiler upgrade scheme will be reduced by hundreds of millions.
- The scheme will not be abolished but its £2.7bn budget will shrink.
- Savings are needed to fund increased defence spending.
- Critics warn of damage to the heat pump industry and climate goals.
Comparing Heat Pump Costs With and Without Subsidies
| Scenario | Average Cost | Grant Available | Net Cost to Homeowner |
|---|---|---|---|
| With current BUS grant | £10,000 | £7,500 | £2,500 |
| With reduced grant (estimated) | £10,000 | £4,000 | £6,000 |
| Without any grant | £10,000 | £0 | £10,000 |
As the table shows, even a partial reduction in subsidies significantly increases the upfront cost for households, which could deter many from making the switch.
The Broader Energy Context
Ministers are also expected to approve the Jackdaw gasfield, a move that contradicts the push for renewable heating. The decision to cut heat pump subsidies while greenlighting new gas extraction raises questions about the government's energy strategy. With gas prices volatile, reliance on gas leaves consumers vulnerable to price spikes.
FAQ
What is the boiler upgrade scheme?
The boiler upgrade scheme (BUS) is a UK government grant that provides up to £9,000 to households in England and Wales to install heat pumps instead of gas boilers.
Why are heat pump subsidies being cut?
The government needs to find over £2bn in savings to fund higher defence spending, and a portion of that will come from reducing the BUS budget.
Will the boiler upgrade scheme be abolished?
No, the scheme will not be abolished altogether, but hundreds of millions of pounds will be cut from its £2.7bn budget.
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