By Salma El-Sakka
Britain is unlikely to meet its green heating targets after Chancellor John Healey announced more than £3bn in cuts to the energy department's budget this week, experts have warned. The reductions, partly intended to fund higher defence spending, include £741m from the boiler upgrade scheme that subsidises heat pump installations.
Cuts to Heat Pump Subsidies
The boiler upgrade scheme currently offers households £7,500 towards replacing gas boilers with electric heat pumps, with about 60,000 units fitted annually in existing homes. The government had planned to raise funding from £400m this year to just over £700m by 2029-30 to reach a target of 250,000 installations per year by 2030. Under the new plan, funding will rise only with inflation, likely causing installations to stagnate or grow far more slowly.
Impact on Installation Targets
Andrew Sissons, a director at research charity Nesta, said the cuts make it "very difficult to see how we can hit our clean heating targets" and warned a Labour government could be the first to miss its own carbon budget commitments. Ed Matthew, director of the UK programme at thinktank E3G, called the move "disappointing – so frustrating," noting the UK lags behind other countries in heat pump rollout.
Broader Energy Policy Shifts
The cuts also include about £250m from the warm homes plan, £500m from hydrogen schemes, and £200m from carbon capture and storage funding – projects previously championed by former energy secretary Ed Miliband and his successor Miatta Fahnbulleh. Healey added that future renewable projects will only be approved if they demonstrate cost reductions and grid readiness. A government source described the shift as "the most significant shift we have seen in energy policy since we came to office," emphasising cost over capacity building.
Government Response and Criticism
Paul Ovenden, a former adviser to Keir Starmer, said the energy capital budgets were being "raided to fund defence" and that Miliband's project was being "picked clean." Allies of Miliband and Fahnbulleh countered that the government's green agenda remains strong, citing a long-term move to shift green costs from bills to taxpayers and plans to decouple electricity prices from gas prices. An energy department spokesperson insisted the government remains committed to clean power by 2030 and the heat pump target, highlighting £110bn of private-sector investment announced over the past two years.
