Heat Pump Subsidies Face Cuts to Bolster Defense Budget
Energy Secretary Miatta Fahnbulleh tasked with finding £2 billion in savings for the upcoming Budget to address a defense funding shortfall.
Heat pump subsidies are slated for significant reductions as part of a broader effort to address a multi-billion pound deficit in the defense budget. Energy Secretary Miatta Fahnbulleh has been directed to identify £2 billion in savings ahead of this month's Budget, which will be allocated to the Defence Investment Plan.
The grants, which can be worth up to £9,000 per household, are reportedly being targeted due to Treasury concerns that they disproportionately benefit middle-income individuals. This move comes as the government grapples with a funding gap in the long-delayed Defence Investment Plan, which was reportedly nearly £5 billion short upon its finalization.
While the welfare budget is expected to remain untouched, other areas such as road projects and school refurbishments may also face delays or cancellations to help bridge the funding shortfall. The government currently provides substantial subsidies through the 'boiler upgrade scheme' to offset the higher cost of heat pumps compared to traditional gas boilers, a program that now appears likely to undergo considerable cutbacks.
Industry representatives have voiced concerns that reducing these subsidies could jeopardize the nation's climate change targets. Greg Jackson, CEO of Octopus Energy, warned that "cutting the engine now would be brutally damaging" to a market that is showing signs of growth. The boiler upgrade scheme currently offers subsidies of £7,500 for homeowners switching from gas boilers to heat pumps, with grants of £9,000 available for those transitioning from oil-fired heating systems while living off the gas grid.