A flagship green energy scheme to encourage homeowners to ditch their gas boilers has been branded an “embarrassment” after uptake in the first year was only a third of the planned level.
The government’s boiler upgrade scheme had a budget of £150 million to subsidise 30,000 ground or air source heat pump and biomass boiler installations between its launch in May last year and the end of March this year. Yet figures published by the energy regulator Ofgem show that fewer than 10,000 installations were completed under the scheme in this period.
Ministers have set a target of 600,000 heat pump installations a year within the next five years and the sale of gas boilers will be banned by 2035.
Heat pumps work by drawing heat from the air or ground to provide hot water and central heating.
An air source pump can cost between £7,000 and £14,000 to buy and install, while a ground source pump costs between £15,000 and £35,000. The government scheme provides a subsidy of between £5,000 and £6,000 depending on the type of system used. In addition to the grant, there is no VAT on installation, offering a further saving of thousands of pounds.
Some people who have installed the pumps have complained that they are unable to make their homes sufficiently warm, although others say they work well and their heating bills are lower. Campaigners say heat pumps save the average homeowner between £6,000 and £7,000 on energy costs over 20 years compared with a gas boiler.
But the Energy and Utilities Alliance, which represents the heating and hot water industry, described the scheme as a “taxpayer handout to those who don’t need it”.
Mike Foster, the chief executive of the trade body, said: “It takes a certain type of genius to fail to give away £150 million of taxpayers’ money and this wretched scheme looks like it has done just that. When will the government actually listen to the people, the majority of whom simply cannot afford a heat pump, subsidised or not.
“It does little for carbon saving compared to investment on insulation. It does not help people keep bills low. It takes from the poor to give to the wealthy and it is an embarrassment of a policy.”
He added: “More taxpayer-subsidised heat pumps have probably been fitted in Cornish holiday homes than the whole of Britain’s second city, Birmingham. That is shameful. People are still hurting with high energy bills, insulating the homes of those most in need should be the priority, not giving hard-earned taxpayers’ cash to those who were going to buy a heat pump anyway. It’s utterly wasteful.”
In February the House of Lords’ environment and climate change committee also criticised the scheme, writing to Lord Callanan, the business and energy minister, calling for urgent reform.
The committee said the scale of funding was insufficient to allow for lower income homes to take advantage of the scheme.
Despite these concerns, the government announced this month that it will extend the scheme to 2028. More than £300 million of subsidy has been already allocated for the next two years.
A Department of Energy Security and Net Zero spokesman said: “We are determined to upgrade heating systems across the UK, expecting uptake to rise and fully confident our target of 600,000 heat pumps installations by 2028 will be met.
“Heat pumps are a proven, scalable option for decarbonising heat. The action we’re taking to power up Britain, increasing our energy security and independence, will reduce the cost of heat pumps, making them a more attractive option.
“Our Boiler Upgrade Scheme will continue to provide grants of up to £6,000 towards the upfront cost of installing a heat pump, and will be extended with new, additional funding in each year until 2028.”
The Times understands that the unspent £90 million of subsidies will now be returned to the Treasury.
At the time the scheme was launched, the government said it would “help kick-start the British heat pump manufacturing industry”. Callanan said the government wanted to “make it easier and more cost-effective for homeowners to move away from using expensive fossil fuels for heating”, adding that the scheme was straightforward and an attractive proposition for homeowners.
