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A sum of £450m has been allocated to give households grants of £5,000 to install low-carbon heating systems – enough to replace 90,000 boilers across the UK.
The grants become available from April 2022 and are set at a level, the government says, that mean people choosing to install a heat pump will pay a similar amount as if they were installing a traditional gas boiler.
The boiler upgrade scheme is part of more than £3.9bn of new funding for decarbonising heat and buildings. This will fund the next three years of investment through the social housing decarbonisation fund, the home upgrade grant scheme, the boiler upgrade scheme and the heat networks transformation programme, and reducing carbon emissions from public buildings through the public sector decarbonisation scheme.
The thinking behind the boiler grants is to encourage people to go green at this stage, rather than force them, and to support a nascent industry whose costs should come down as it gains mass.
The government’s new target is for all new heating systems installed in UK homes by 2035 to be either using low-carbon technologies, such as electric heat pumps, or supporting new technologies like hydrogen-ready boilers. No one will have to rip out gas boilers that are still functioning, the government says.
Prime minister Boris Johnson said: “As we clean up the way we heat our homes over the next decade, we are backing our brilliant innovators to make clean technology like heat pumps as cheap to buy and run as gas boilers – supporting thousands of green jobs.
“Our new grants will help homeowners make the switch sooner, without costing them extra, so that going green is the better choice when their boiler needs an upgrade.
“The heat and buildings strategy sets out how we are taking ‘no-regrets’ action now, particularly on heat pumps, whilst supporting ongoing trials and other research and innovation on our future heating systems, including on hydrogen. We will make a decision on the potential role for hydrogen in heating buildings by 2026, by learning from our Hydrogen Village pilot. Heat pump technology will play a key role in all scenarios, so for those who want to install them now, we are supporting them to do so.”
Business and energy secretary Kwasi Kwarteng said: “Recent volatile global gas prices have highlighted the need to double down on our efforts to reduce Britain’s reliance on fossil fuels and move away from gas boilers over the coming decade to protect consumers in long term.
“As the technology improves and costs plummet over the next decade, we expect low carbon heating systems will become the obvious, affordable choice for consumers. Through our new grant scheme, we will ensure people are able to choose a more efficient alternative in the meantime.”
To ensure electric heat pumps will be no more expensive to run than gas boilers, ministers want to reduce the price of electricity over the next decade by shifting levies away from electricity to gas. A call for evidence is expected to be published with decisions made in 2022.
Industry reaction
CBI chief policy director Matthew Fell said: “£5,000 heat pump grants will help get the ball rolling when it comes to decarbonising homes across the UK. The government’s heat and buildings strategy provides a golden opportunity for both the public and private sector to pick up the pace of progress to net zero.
“There’s no doubt that the scale of the challenge is considerable. These welcome measures – including the 2035 phase out of new gas boilers – will help consumers and business better prepare to change the way they heat their homes and buildings.
“Government must now support this valuable work with a clear delivery plan for consumers, businesses and local authorities. The time is now to accelerate low carbon heat and energy efficiency solutions, grow the number of green jobs across the UK, and further support the government’s net zero ambitions.”
Phil Hurley, chair of the Heat Pump Association, which represents heat pump manufacturers, said: “Today's announcement will give industry and installers a huge confidence boost that now is the time to scale-up and retrain in preparation for the mass roll out of heat pumps, as well as making heat pumps more affordable, so all consumers can soon access and enjoy the benefits of reliable low carbon heating that stands the test of time.”
Property developer Dean Clifford, co-founder of Great Marlborough Estates, said: “With heating accounting for over one-fifth of the UK’s carbon emissions, we welcome what is the first strategy of its kind for England. The country is home to some of the oldest housing stock globally. As the focus shifts to embodied carbon, we need to balance preserving our built environment heritage and meeting our net zero 2050 targets.
“However, by focusing on existing housing, the strategy presents some missed opportunities for the new build sector. With recent developments crucial for making up the shortfall on the government’s annual housing targets, we need to ensure that the highest decarbonisation standards are enshrined for all buildings, which means incentivising developers to build greener, cleaner houses.”
Russell Pedley, co-founder and director of Assael Architecture, said: “Architects have long been aware of the need to design low carbon homes, and this new strategy marks a major step forward when it comes to decarbonising England’s ageing housing stock. However, with much emphasis placed on incentivising households to install heat pumps, it is unclear what this means for private renters, who make up nearly a fifth of the country’s household occupiers.
“As England’s build-to-rent sector continues to grow year on year, more attention needs to be paid to the crucial role these homes can play in meeting the government’s decarbonisation targets while making up the shortfall in annual housing delivery. Modern methods of construction, used for many build-to-rent developments, can also help to bring in new talent from across the manufacturing sector to ensure we have the skills available to deliver a transition to low carbon housing.”
Mike Foster, chief executive of the Energy & Utilities Alliance, said: “The grant hardly sets the world alight and is insufficient to the scale of the challenge we face in terms of reaching net zero.”
“It subsidises 30,000 heat pumps being installed each year and is well short of the support needed to get to 600,000 heat pumps installed each year by 2028. My suspicion is that the chancellor is putting the brakes on the prime minister’s flight of green fantasy.”
“I suspect hydrogen-ready boiler installations will be far greater than that number by 2028, suggesting that consumers have made their choice. But that choice, between heat pumps or hydrogen-ready boilers, is one they should have.”
He continued: “For the 4.5 million households currently in fuel poverty, faced with rocketing bills and cuts to their universal credit, they must wonder what they have done wrong. The £5,000 grant only pays half the cost of a heat pump, so those in fuel poverty will see no warmth from the government’s generosity; instead, it is middle-class bung for people who were probably going to fit a heat pump anyway.
“For the same amount of money, £150m a year, half a million homes could have loft insulation fitted, saving each household £135 a year, and removing 290,000 tonnes of carbon emissions each year. Instead, removing 45,000 gas boilers, replacing them with the subsidised heat pumps will remove only 71,000 tonnes of carbon each year. This is hardly the COP figure the prime minister wants to read.”
Brian Berry, chief executive of the Federation of Master Builders, said: “Today’s heat and buildings strategy needs to set out a bold and long-term plan of action to tackle the impact of our homes on the climate. Unfortunately, it is not looking encouraging. Grants for heat pumps is a step in the right direction so we begin to reduce our reliance on polluting and volatile fossil fuels, but incentives are also needed to make our existing homes better insulated.
“The government appears to be only listening to one half of the story. If there is no detail in the strategy on how we can address the mega-tonnes of carbon lost through the leaky walls and roofs of our homes, it will have failed and the benefits of installing heat pumps risk being lost.
“Without a long-term national retrofit strategy, including a proper skills plan and communications campaign, regular consumers won’t know what action they need to take, nor feel it’s within their grasp; and industry won’t take the long-term investment decisions needed to be ready to deliver. I can only hope that the chancellor will use next week’s Budget to address some of these gaps.”
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