Downing Street feels heat over ‘boiler tax’, and its potential scrappage
The Tories, haunted by environmental u-turns, are stuck between a rock and a hard place with their planned domestic energy levy, and idea to abandon it.
The Clean Heat Market Mechanism (CHMM) is due to come into effect from April 2024. This means manufacturers must substitute 4% of their current annual sales of standard boilers with heat pumps, or face a finer of £3,000 for each of the latter units they didn’t shift, up to 3% of their total sales.
Highly divisive, many have raised concerns that this could lead to more heat pumps being installed inappropriately because of high pressures to make sales, or a significant increase in the price of new boilers in a bid to cover the fines that will result from failing to meet heat pump quotas. As has already started to happen, with price rises evident across the market, adding to the burden of an ongoing energy crisis.
This is likely to disproportionately effect those struggling with living costs the most, and, according to Mark McShane, who leads on Sustainable Heating Solutions at Boiler Cover UK, may result in companies actually making a windfall from the new rules by overpricing boilers and blaming government policy. Meanwhile, he also points to a significant operational and financial challenge for manufacturers, not to mention the risk of reputational damage for the market as a whole.
‘There should be a more collaborative effort between the government, boiler manufacturers, and other stakeholders to set realistic and achievable targets for heat pump installations. This includes considering the current capacity of the heat pump market and the readiness of both consumers and the industry to make such a transition,’ said McShane. ‘Any levy imposed on gas boilers should be transparent and directly linked to demonstrable efforts to increase the adoption of heat pumps, rather than as a means to generate additional revenue.
‘A portion of the revenue from any such levy should be earmarked for subsidising heat pump installations for lower-income households or for investing in the development of more affordable and efficient heat pump technologies,’ he continued. ‘Finally, there needs to be a significant investment in consumer education and incentives to encourage the uptake of heat pumps. This could include grants, low-interest loans, or rebates for households that choose to install eco-friendly heating solutions, making it a more attractive and financially viable option for a broader segment of the population.
Boiler Cover UK has also published the results of a nationwide analysis, revealing the regions likely to be worst impacted by the ‘boiler tax’. This is based on the initial installation cost and the annual running cost of a gas boiler – £1,080 per year – compared with the average annual income in each English county to determine the percentage of an individual’s salary that would now be taken up by boiler expenses.
English Counties Facing Steepest ‘Boiler Tax’ Rise
- Herefordshire: 13.74%
- Cornwall: 13.65%
- Northumberland: 12.95%
- Warwickshire: 12.92%
- Suffolk: 12.47%
- Yorkshire: 12.37%
- Devon: 12.34%
- Durham: 12.21%
- Leicestershire: 12.13%
- Bedfordshire: 12.11%
- Nottinghamshire: 12.11%
- Isle of Wight: 12.01%
- Derbyshire: 11.96%
- Cheshire: 11.93%
- Lancashire: 11.84%
- Norfolk: 11.84%
- Staffordshire: 11.81%
- Worcestershire: 11.62%
- Dorset: 11.60%
- Somerset: 11.58%
- Northamptonshire: 11.26%
- Lincolnshire: 10.94%
- Sussex: 10.64%
- Gloucestershire: 10.53%
- Cambridgeshire: 10.42%
- Surrey: 10.41%
- Hertfordshire: 9.98%
- Kent: 9.94%
- Hampshire: 9.25%
- Buckinghamshire: 9.18%
- Oxfordshire: 8.94%
- Berkshire: 8.71%
- Greater London: 8.36%
However, earlier this month it emerged that the UK Government was already considering scrapping the heat pump finance scheme due to the response from many companies, with leading firms such as Worcester Bosch stating they saw the quotas as impossible.
Energy Secretary, Claire Coutinho, was reportedly considering abandoning the policy before it’s even introduced, in move that will be welcomed by many consumers and the sector itself: ‘Boiler manufacturers have saddled families with indefensible price hikes — this is not right,’ a Downing Street spokesperson told The Times. ‘We’re looking again at the policy, and expect manufacturers to do the right thing and remove their price hikes immediately.’
In comparison, tho potential scrapping of the scheme has been met with widespread criticism by others, including environmental campaigners and local leaders. Cllr Richard Clewer, who has previously spoken to Environment Journal on the need for greater regional powers to tackle climate change, is the leader of Wiltshire County Council and current UK100 Co-Leader and is among those sounding alarms about another potential u-turn.
‘I would be extremely concerned at any action that reduces the imperative on industry to increase delivery of carbon neutral heating systems. We need to see the heat pump industry expand to deliver the economies of scale that will eventually make it affordable to everyone. Government legislation is, frustratingly, required to help drive that expansion,’ said Clewer. ‘If we fail to act now to reduce carbon emissions, our children and grandchildren will inherit a much more challenging and much less pleasant world than we did.’
‘This hesitation not only underscores a failure to lead in the transition to sustainable technology but also signals a disregard for the economic and environmental welfare of our nation,’ added Cllr Mike McKeown, Cabinet Member for Climate Change and Sustainability at Cotswold District Council. ‘The government’s backpedalling on crucial climate initiatives not only undermines our collective efforts to combat climate change but also places an undue strain on local governments. Already grappling with chronic underfunding, local authorities are tasked with encouraging and supporting climate action within their communities. This task is made significantly harder by the government’s reluctance to firmly commit to and invest in sustainable technologies.’
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Image: Ayesha Firdaus