Heat pump targets add up to a tax on households, critics warn

Heat pump targets are to remain in place
Heat pump targets are to remain in place - RONALD WITTEK/EPA-EFE/Shutterstock

Boiler makers are set to be handed sales targets for heat pumps despite Rishi Sunak’s pledge to adopt a more “proportionate” approach to net zero.

Ministers plan to press ahead with controversial plans which will see manufacturers face hefty fines from next year if they fail to install enough systems.

Critics have said the proposals amount to a new “tax” on households and warned firms will simply pass the costs of penalties onto consumers via higher bills.

Downing Street is also poised to recommit to similar binding targets on car makers despite pushing the ban on new petrol and diesel vehicles back to 2035.

Mr Sunak announced last week that he was significantly relaxing the planned bans on oil and gas boilers over growing concerns about the cost of net zero.

The Prime Minister acknowledged that many people cannot afford to make the switch to heat pumps, which can cost up to £15,000 to purchase and install.

But ministers have not dropped corresponding plans to introduce tough new targets for sales of the pricey electric systems, which will come into force in April.

Manufacturers will be set a quota, calculated as a proportion of their gas boiler installations, and face being fined £5,000 for every one they fall short by.

The decision means that the industry overall faces having to shift around 75,000 heat pumps next year, a figure which will rise to 110,000 in 2025-26.

Quotas to soar

After that the number will ratchet up rapidly to hit the Government’s aim of achieving and then sustaining 600,000 annual installations from 2028-29.

The plans, which have faced criticism from Conservative backbenchers and industry, would cost businesses £59m a year according to Whitehall.

Sir John Redwood, the Tory MP for Wokingham, said the proposals amounted to “a tax on the gas boiler” to force families into adopting heat pumps.

He warned: “It’s not a good way to proceed. You don’t need to subsidise and regulate to get people to buy things which are good and affordable.

“Markets work pretty well and people make good decisions for themselves and it’s not the job of the Government to tell them they’re making the wrong ones.

“Setting arbitrary targets is not a good idea. It’s premature to start imposing burdens on companies when the public don’t want to buy them.”

Mike Foster, chief executive of the Energy and Utilities Alliance, said the Prime Minister’s promises were “unravelling” because Whitehall is “wedded to old targets”.

He said: “We now know the logic the Government is going to follow. It won’t ban people from having a gas or oil boiler but it plans to price them out of doing so.

“Boiler manufacturers are going to be penalised for not putting heat pumps into homes when they are unaffordable for the vast majority of people.

“They will end up recouping the fine from the consumer by putting their prices up. That’s a real slap in the face for the least well off in our communities.

“I think people are going to get really angry when they realise that the reset that was promised by the Prime Minister doesn’t materialise in reality.”

A spokesman for the net zero department said the proposals, called the Clean Heat Market Mechanism, will “provide industry with the incentive and certainty to invest in heat pumps, to help make them a more affordable and attractive choice for families across the country”.

’Even cheaper for families’

“We’re making it even cheaper for families to install a heat pump which we expect will encourage further take up, and the scheme’s targets will be achievable, providing manufacturers with flexible options to help meet our net zero ambitions,” he added.

The Government is also sticking by mandatory sales targets for electric vehicles despite Mr Sunak watering down the ban on petrol and diesel cars.

That decision means half of new motors sold in the UK will have to be electric within five years, with manufacturers facing fines if they fall short of their quotas.

The Prime Minister delayed the ban on the sale of new petrol and diesel cars from 2030 to 2035 last week after admitting the country is not ready for the switch.

In his speech, Mr Sunak said the charging system is not yet “truly nationwide” and that “small businesses are worried about the practicalities” of net zero policies.

The Telegraph understands that ministers will confirm the policy within a matter of weeks in their response to a consultation of businesses.