Energy Budget: Healey Cuts Threaten UK Heat Pump Targets

The UK government is on track to miss its green heating targets following a wave of budget cuts announced by Chancellor John Healey. The reductions, totaling more than £3 billion, will primarily fund an increase in defense spending. These moves have drawn sharp criticism from energy experts who argue the pro-renewables agenda championed by former energy secretary Ed Miliband is being dismantled.

The most direct hit to clean heating infrastructure is the boiler upgrade scheme. Healey allocated £741 million in cuts to this program, which subsidizes the replacement of gas boilers with electric heat pumps. Under the current rules, a typical household can claim £7,500 toward a heat pump installation. The government previously aimed to increase annual installations from 60,000 to 250,000 by 2030. Funding was set to grow from £400 million this year to just over £700 million by 2029-30. Now, ministers say funding will only rise with inflation, meaning installations may stagnate.

Andrew Sissons, director at research charity Nesta, stated that it is very difficult to see how the country will hit its clean heating targets. He noted that a Labour government could become the first to miss targets signed up to in the current carbon budget. Ed Matthew, director of the UK programme at thinktank E3G, called the cuts frustrating. He said the UK is behind other countries in heat pump rollout and needs a major shift in take-up rates.

Beyond heat pumps, Healey cut approximately £250 million from the warm homes plan. He also reduced funding for hydrogen schemes by £500 million and for carbon capture and storage technology by £200 million. All three areas were previously supported by Miliband. Healey added that future renewable projects will only be approved if they demonstrate cost reductions and grid readiness. This shift emphasizes cost efficiency over capacity building, a change one government source described as the most significant energy policy shift since the current administration took office.

Paul Ovenden, a former adviser to Keir Starmer, observed that energy capital budgets are being raided to fund defense. He described the process as picking the bones of Miliband’s project clean. Ovenden suggested that had Miliband not helped oust Starmer and Rachel Reeves, he might still be in post and the cuts might not have happened. However, allies of Miliband and current energy secretary Miatta Fahnbulleh argue the green agenda remains strong. They point to a long-term move to shift green costs from energy bills to taxpayers, a policy both secretaries have championed.

The energy department maintains that it is committed to meeting heat pump targets to protect consumers from volatile fossil fuel prices. A spokesperson noted that £110 billion in private sector investment has been announced over the last two years. This investment secures enough clean power for over 20 million homes, according to the department.