Fines for missing heat pump targets could be dropped, Downing Street hints

Fines for missing heat pump targets could be dropped, Downing Street hints
A man installing a heat pump in a gardenGetty Images

The government has suggested it could abandon plans to fine big boiler makers if they fail to hit heat pump targets.

The penalties are part of a scheme beginning in April that aims to speed up the phasing out of gas boilers.

But ministers are reportedly poised to scrap the fines, after manufacturers raised boiler prices.

When asked about the reports, Downing Street told reporters “no decision has been made” on the scheme’s future.

If confirmed, scrapping the scheme would be the latest move from Rishi Sunak’s government to roll back a green target in the name of protecting households from rising costs.

It comes after a target to ban the sale of new gas boilers from 2035 was watered down last year, with a new exemption introduced for poorer households.

The government has a target of installing 600,000 electric heat pumps a year by 2028 to help the UK meet its carbon emission reduction targets.

Installations of the devices, which produce heat by absorbing it from the air, ground or water around a building, have risen in recent years but are still well below that target, with 36,799 set up last year.

In a bid to spur uptake, the government raised grants for households installing them from £5,000 to £7,500 in October. Air source heat pumps – the most common type for households – are estimated cost £10,000 more on average than gas boilers.

The scheme beginning in April would require manufacturers to match or substitute 4% of their annual gas or oil boiler sales with heat pumps, rising to 6% from April 2025, with £3,000 fines for every unit they fall short by.

It would not apply to smaller manufacturers, with boilers made to be sold abroad or installed in new-build homes exempted.

When the targets was announced in November, the government said it was confident they would be met and fines “should not be required in practice”.

But a number of manufacturers argue fines are inevitable because the targets are unachievable, and have added surcharges of up to £120 to offset the cost, which have been dubbed the “boiler tax”.

A move to scrap the fines has not been confirmed, but the Sunday Times reported that Energy Secretary Claire Coutinho was poised to do so in a bid to prevent the price rises impacting consumers.

‘Bending to blackmail’

She had previously accused boiler makers of “price gouging” by raising prices in anticipation of the introduction of the fines.

Speaking in December, she had vowed to look into the issue, and stop companies passing on “unfair cost” to customers.

Greenpeace UK expressed dismay at the suggestion the fines could be ditched, accusing the government of “bending to blackmail from boiler companies”.

Georgia Whitaker, a campaigner for the group, added: “This kind of flip flopping is bad for industry, shows the government as weak, and sends confusing signs to businesses and households.

“This is no time for another net zero roll back – it is high time for climate action and proper leadership,” she added.

However the Energy and Utilities Alliance, which represents a number of big boiler makers, said companies had been “obliged to increase their prices to cover the cost of the penalty fines”.

Chief Executive Mike Foster said the companies had consistently argued the policy was “badly designed,” and would fail to drive up demand for heat pumps.

“If the government formally announce the scrapping of the fines then I expect the boiler manufacturers to respond immediately and announce they are rescinding their price increases,” he added.

Mr Sunak’s spokesperson said the government was on track to meet its 2028 heat pump installation target, adding the prime minister wants to do this “in a way that doesn’t burden consumers”.

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By David Ryckman