Ministers are preparing to slash the amount of money available to subsidise heat pumps as they look for ways to fund higher defence spending, sources have told the Guardian. Miatta Fahnbulleh, the energy secretary, has been tasked with finding more than £2bn in savings from her budget to help pay for defence investment under a plan drawn up by the previous government. Sources say a portion of those savings will come from cutting the boiler upgrade scheme (BUS) for England and Wales, which provides grants of up to £9,000 to help households switch to cleaner heating methods.
The programme will not be abolished altogether but sources say hundreds of millions of pounds will be cut from its £2.7bn budget. The scheme has helped tens of thousands of households install an electric heat pump in place of an old gas boiler, but Treasury officials have long considered it a subsidy used mainly by middle-class households. Critics say cutting the scheme would damage the nascent British heat pump industry and further undermine the government’s commitment to tackling the climate crisis.
Ministers are also expected to give the go-ahead for the Jackdaw gasfield as soon as this week. Madeleine Gabriel, a director at the charity 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.
It’s kicking off an industry to drive down the costs of heat pumps – they can now cost the same to install as a gas boiler after the grant.” He added: “Just as EVs are becoming the new normal, heat pumps are too. In the last 18 months, more than 500,000 have asked us for a quote. Cutting the engine now would be brutally damaging.
Heat pumps are undoubtedly our energy future – slashing the cost of living and insulating us against fossil fuel costs and global dictators.” A spokesperson for the Department for Energy Security and Net Zero said: “Savings for the defence investment plan (Dip) are a small part of [the department’s] overall budget, which saw a significant uplift at spending review. Miliband agreed that the energy department would cut its capital budget by £2bn to help pay for the Dip. Energy officials say the cuts pale in comparison with the overall growth in the energy department’s capital budget, which is one of the fastest growing in Whitehall.
The chancellor, John Healey, resigned as defence secretary in June under Starmer, arguing that the defence uplift was not enough. He now has to find an additional £4.7bn in savings over a four-year period beyond what departments have already agreed. Bloomberg reported this month that as part of the cuts to the energy department, ministers were planning to reduce spending on carbon capture and storage (CCS) and green hydrogen schemes.
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