Heat pumps subsidies - are they full of hot air?

By Harry Fone, grassroots campaign manager at the TaxPayers’ Alliance

As COP26 rolls on, leaders and climate experts from around the world have discussed a myriad of ways to cut carbon emissions. One much-touted method in this country is to replace gas boilers in our homes with air or ground source heat pumps. 


From April, households will be able to claim a taxpayer-funded subsidy of £5,000 to install a heat pump. This doesn’t fully cover the cost, which can be anywhere from £6,000 to £18,000, but will be a big incentive to many homeowners. Currently, £450 million has been allocated for the subsidies over three years; enough for just 90,000 homes. But ultimately around 23 million homes will need to see their gas boilers ripped out. Were each of these to get a £5,000 subsidy, the total cost would be £115 billion. Thankfully, there’s no suggestion that the government will stump up all that cash - yet!


Undoubtedly, measures must be taken to tackle climate change and help the country go green. But this is still taxpayers’ money. No matter how noble the cause - whether that be defence, healthcare or climate spending - we should always be asking if money is being used as efficiently as possible. 


Can we be sure this is the case with heat pumps? After all, the Committee on Climate Change says the UK needs more like 450,000 gas boilers replaced by 2025 - meaning a realistic bill of around £2.25 billion in subsidies. Would that investment be worth it, or could the money be better spent elsewhere? 


Here’s five other ways that cash could be helping reduce carbon emissions: 


  1. Road pricing: Congestion costs the UK economy billions of pounds every year. £6.9 billion in 2019 to be precise. The current taxation system of vehicle excise and fuel duties doesn’t tackle traffic jams at peak times. Replacing these duties with road pricing could well be the solution. Charging motorists a higher price for driving at rush hour could well deter unnecessary journeys or at least delay them to a less busy time of day. The benefits are plain to see, fewer traffic jams and less pollution. There will be a cost to this. Road pricing won’t necessarily replace the revenues generated by car and fuel taxes but the Treasury would have £2.25 billion to help sweeten the pill.

  2. Build more nuclear power: Rolls Royce is leading the charge to build small nuclear reactors that could power towns and small cities across the UK. Nuclear power is a fantastic source of plentiful reliable energy that after construction produces virtually no carbon dioxide emissions. The potential £2.25 billion heat pump bill is more than ten times the £210 million in match funding requested for these reactors.

  3. Buy homes an energy-efficient fridge freezer: In the last 20 years domestic appliances have become incredibly efficient. Appliances like fridge freezers use less and less electricity with every iteration. With a typical A+ fridge freezer costing just under £400, a £2.25 billion pot could supply more than 5.6 million of them. Energy consumption would fall and food might even stay fresher for longer, reducing trips to the shops.

  4. Electric cars: New vehicle technologies have been great at cutting carbon emissions and nasty pollutants, particularly in densely populated areas. Some electric cars now cost as little as £20,000. £2.25 billion would buy 112,500 of them, particularly to replace government owned gas guzzlers - a great way to help the environment and get older diesel and petrol cars off the road quicker.

  5. Upgrade Britain’s bus fleet to electric: Just like cars, the price of electric buses has fallen too. With a typical cost of around £350,000, Britain could buy nearly 6,500 of them. According to Stagecoach there are around 32,000 buses in service in the UK. We could quickly and effectively upgrade a fifth of the fleet to bolster public transport and cut emissions at the same time.


Whenever money is spent, questions must be asked about whether it is being used correctly. Compared to the many alternatives available, plans to subsidise heat pumps for houses across the country may well prove to be full of hot air.

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