UK Slashes Heat Pump Subsidies to Fund Defence — SkimNews
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- Miatta Fahnbulleh, the energy secretary, has been tasked with finding more than £2bn in savings from her department's budget to help fund the defence investment plan drawn up by the previous government.
- Ministers plan to cut "hundreds of millions" from the £2.7bn Boiler Upgrade Scheme, which offers grants of £7,500–£9,000 to households switching from gas boilers to electric heat pumps; the scheme will not be scrapped entirely.
- The Boiler Upgrade Scheme has helped install nearly 80,000 heat pumps since 2022, and the UK domestic heat pump industry is expanding by more than 25% a year — though France sold four times as many heat pumps as the UK last year.
- Treasury officials have long viewed the scheme as a subsidy used mainly by middle-class households, though supporters say more than 40% of the money has gone to households earning under £52,000 a year.
- Octopus Energy CEO Greg Jackson and Nesta director Madeleine Gabriel warned the cuts would damage a nascent industry and leave households exposed to volatile gas prices; Octopus said more than 500,000 customers asked for heat pump quotes in the last 18 months.
- Ed Miliband, as the previous energy secretary, agreed the cuts to help fund the £15bn defence uplift agreed under PM Keir Starmer; new chancellor John Healey, previously defence secretary, resigned in June arguing the defence uplift was insufficient and must now find an extra £4.7bn in savings.
- Bloomberg also reported ministers plan to reduce spending on carbon capture and storage (where £21.7bn was earmarked through 2050) and green hydrogen schemes, and ministers are expected to approve the Jackdaw gasfield as soon as this week.
Why it matters: Cuts to the Boiler Upgrade Scheme — announced as the UK heat pump industry grows 25%+ annually and gas bills climb again — threaten to undo the gains just as heat pumps reach cost parity with gas boilers. The expected Jackdaw gasfield approval this week underscores the trade-off between defence funding and the green transition.
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