Thousands of families face being shut out from saving around £230 a year on their energy bills under “short-sighted” Government proposals to slash heat pump subsidies.
Ministers are planning to cut hundreds of millions of pounds from the Boiler Upgrade Scheme (BUS), a flagship element of the Warm Homes Plan, it has been reported. The savings will help fund increased defence spending.
The scheme for England and Wales, which provides grants of up to £9,000 to help households replace their gas boiler with an electric heat pump, faces a significant cut to its £2.7bn budget, The Guardian has reported.
But energy and fuel poverty experts have slammed the proposals, urging ministers to introduce targeted help for low-income households instead.
‘A serious mistake’
The subsidies have been used for almost 80,000 heat pumps, which can save households an average of £230 on energy bills a year.
Nesta, a research charity, supports phasing out of the subsidy over time, but said an abrupt end to the scheme would risk “wiping out” the industry – and with it the savings households can make.
“You have to make sure you don’t do anything drastic… because otherwise companies who’ve invested in it will just say, ‘Well, no, actually this is clearly not the right market for me’,” Andrew Sissons, director of sustainable future mission at Nesta, said.
Treasury officials are understood to view the subsidy, which is not means-tested, as one mainly accessed by middle-class households.
A 2026 evaluation report found 56 per cent of households taking part in the BUS scheme had a gross income of more than £52,000. This compares to a national median of £54,740, the report found.
But 37 per cent of those who accessed the scheme had a household income of between £20,800 and £52,000.
Sissons also said the scheme being accessed by higher numbers of “better-off” households was in line with its purpose, with other support available for low-income households.
“It’s sometimes described as being for able-to-pay households, and that’s because even with the Boiler Upgrade Scheme, a household replacing a gas boiler still has to pay around £5,000 on average,” he added.
‘Target support for low-income households’
Matt Copeland, interim director of policy at National Energy Action, added a better solution is to reform the scheme to potentially “fully fund heat pumps for lower-income households”.
NEA is asking for the Treasury to launch targeted energy support for low-income households this winter, forgive a portion of energy debt – especially for financially vulnerable households – and accelerate the Warm Homes Plan.
This would mean low-income households are supported to decarbonise their homes and shield themselves from energy price shocks.
It comes as the Energy Company Obligation (ECO4) scheme, which fully funds heat pumps for low-income and vulnerable households, is set to come to an end on 31 December.
Jonathan Bean, spokesperson for Fuel Poverty Action, said while the BUS scheme was “flawed”, it “should not be cut to fund weapons”.
“Instead, the Government should make the Warm Homes Plan fairer so everyone can get the benefits of affordable heating and hot water using renewable energy.”
He added: “Most of the boiler upgrade funding goes to more affluent homes. Those in small homes and flats are missing out, especially those in electric-only homes who pay three times the price of those with gas or heating oil.
“Government belatedly added air-to-air heat pumps to the scheme, which are better for smaller homes, but only offers a £2,500 subsidy compared to the current £9,000 for homes with oil.”
Simon Francis, co-ordinator for the End Fuel Poverty Coalition, added voters will feel betrayed if Andy Burnham does not back the Warm Homes Plan to the full extent outlined in Labour’s manifesto.
The party promised to “save families hundreds of pounds, slash fuel poverty and get Britain back on track to meet our climate targets”.
But Francis said: “The Government needs to protect households now and ensure that our homes are fit for the future and cheaper to heat. It should not be a case of either or.”
He called for better targeted support, suggesting a referral route could ensure the people who most need help can access it.
Greg Jackson, founder and CEO of Octopus Energy, described the move to cut heat pump subsidies to enhance defence as “remarkably short-sighted”.
“Britain’s exposure to gas cost the Treasury £80bn in the last energy crisis. The Boiler Upgrade Scheme budget is just 0.5 per cent of that, and is key to getting off gas,” he said.
A Department for Energy Security and Net Zero (DESNZ) spokesperson said: “Savings for the Defence Investment Plan are a small part of DESNZ’s overall budget, which saw a significant uplift at spending review.
“We will set out how we will fund essential investment in our national security this autumn.”