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The rich are benefitting most from Rishi Sunak’s upgraded £7500 grant to scrap their gas boiler and replace it with a heat pump, a report by MPs reveals today.
MPs on the Commons Public Accounts Committee expressed concern that most of the state subsidy is going to people who do not need the support to install a heat pump.
They said: “We are concerned that most households receiving the government’s £7,500 Boiler Upgrade Scheme grant might be from more affluent groups, as they are more likely to be able to afford the additional costs and may have installed a heat pump even without the grant.”
The reason is most heat pumps cost £11,600 to install and the home owner has to find another £4100 to complete the installation and face higher electricity bills to run the pump for at least the next two years.
The government has said that applications to install heat pumps jumped 93% following Sunak’s announcement of more money.
But the latest figures from the Department for Energy Security and Net Zero to March this year reveal a huge mismatch between the prosperous parts of England and the poorest areas. Over 7000 people applied for the grant in the South East compared to just over 1000 in the North East – a seven fold difference. A full breakdown of socio-economic groups applying for the grant will not be available until after the election.
The government is not monitoring how many applications lead to the installation of heat pumps.
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The report notes: “DESNZ does not hold, or collect, information on whether the heat pumps that have been sold have been installed. It accepts that requiring people to inform DESNZ when they have installed a heat pump would be too burdensome.”
The report reveals that the government has delayed a spate of decisions which make it more difficult for people to decide whether to replace their old boiler. A decision to rebalance electricity and gas prices has been put off for two years – since it would increase gas prices for people still using gas boilers.
The government, while lifting a heat pump requirement for cavity wall and loft installation to save people £2500, has not provided any information on excess heating bills caused by lack of insulation or any impartial advice on the best heat pumps.
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The government has also delayed by a year a plan to fine companies if they did not meet targets to sell enough heat pumps. The four biggest companies who supply them are facing a Competition and Markets Authority investigation after they decided to hike the price of gas boilers by £100 in response to the government plan to fine them if they missed imposed targets.
Getting a heat pump installer is also difficult – only 7000 have been trained to meet a government target of 12,000 next year. MPs say they would need over 33,000 to meet the target of installing 600,000 heat pumps by 2028 and there are no plans yet to retrain the 118,000 gas boiler fitters to service heat pumps.
The government has also delayed a plan to trial hydrogen energy in a town by another 13 months to 2026. It is estimated that 20% of homes in Britain will be unable to install heat pumps, but ministers have not yet drawn up any plans to tackle this once new gas boilers are phased out in 2035.
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The Department of Energy Security and Net Zero said it could not comment on the report now the general election has been called.
An official response to the report from the ministry will be decided by the new government after the election. It will be to a new public accounts committee with a new chairman since Dame Meg Hillier is relinquishing her post when Parliament is officially prorogued this week.
Click here for more information on the heat pump grant.