Tens of thousands of households could miss out on thousands of pounds towards replacing their ageing boilers if ministers press ahead with cuts to heat pump grants to fund defence spending.
The Department for Energy Security and Net Zero is expected to slash hundreds of millions from its flagship Boiler Upgrade Scheme (BUS) to help pay for the Defence Investment Plan (DIP) unveiled by Sir Keir Starmer earlier this year.
Under the BUS, eligible households in England and Wales can receive £7,500 towards an air-source or ground-source heat pump, rising to £9,000 for qualifying homes heated by oil or Liquefied Petroleum Gas.
However, the clean tech industry is braced for cuts to the scheme under a deal which the former energy secretary Ed Miliband agreed with Starmer to reduce DESNZ’s capital budget by £2bn to help fund the DIP, which is facing a £4.7bn shortfall. The cut to the grants scheme was first reported by The Guardian.
Backlash from clean tech industry
An industry source with close links to the Government told The i Paper that they expected a cut “in the order of hundreds of millions” to the BUS’s £2.7bn five-year budget.
A £200m cut would be equivalent to around 22,000–27,000 grants at current rates, while £300m would equate to around 33,000–40,000. These are illustrations of the potential scale, not confirmed numbers of households who would lose support.
Figures from the energy regulator Ofgem show that 96,611 BUS grants had been redeemed by 30 September 2026, with £687.45m paid out since the scheme launched in May 2022.
The scheme has a budget of £400m for 2026–27, with £143,585,000 remaining at the end of September. That figure includes applications being assessed and vouchers issued but not yet redeemed, so it does not represent all the money available to new applicants.
The final impact on households will depend on the eventual size of the cut, whether grant values or eligibility rules change, and how existing applications are treated.
The prospect of a cut to the BUS has already sparked a fierce backlash from the clean tech industry and environmentalists.
The industry source told The i Paper it was “very concerning for the sector” and “a really weird signal to be sending”, given the £2.7bn for the BUS had been confirmed in the Government’s Warm Homes Plan published as recently as January 2026. “That bit of the plan won’t even have survived a year,” they said.
The source pointed out that the UK is already “way off” the target outlined in the Warm Homes Plan to deliver 450,000 heat pump installations in existing and new buildings by 2030.
In 2025, 54,265 heat pumps were retrofitted into domestic properties according to figures from DESNZ, although this does not include installations in new homes.
Cut sends a ‘really bad’ signal
The source said that the cut to the BUS sent a “really bad” signal to the heat pump supply chain. “If companies can’t see that pipeline coming through then they won’t invest,” they said.
The cut would come as targets for heat pump sales are set to be more than doubled. The i Paper reported last week that ministers have proposed raising the target from 8 per cent of relevant boiler sales in 2026-27 to 18 per cent by 2030-31. These plans are subject to consultation and are not yet final, but manufacturers indicated it could force the price of heat pumps down.
Greg Jackson, the founder and chief executive of Octopus Energy, the UK’s largest electricity supplier, said last week that cutting the BUS would be “remarkably short sighted” and would “put thousands of skilled jobs at risk”.
The Green Party of England and Wales has also criticised cuts to the Warm Homes Plan, particularly in light of the fact that the Government is finally expected to approve the Jackdaw North Sea gas field this week.
Green MP Hannah Spencer said that ministers were “looking to raid the Warm Homes Plan” in next week’s Budget while “issuing oil and gas licences that hand millions in tax breaks to polluters already profiting from high energy costs”.
A 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.”