Britain is facing a significant risk of missing its green heating targets following budget cuts announced this week by Chancellor John Healey. Experts have warned that the reduction in funding for the energy department, which totals more than £3bn, will undermine the nation's clean heating ambitions. A substantial portion of these savings is being redirected to finance increased defence spending, a move that critics argue dismantles the pro-renewables agenda established by former Energy Secretary Ed Miliband and his successor, Miatta Fahnbulleh.
One of the primary casualties of this fiscal adjustment is the government's scheme to subsidise heat pumps. The cuts include £741m removed from the boiler upgrade scheme, which currently allows typical households to claim £7,500 towards replacing gas boilers with electric heat pumps. While approximately 60,000 units are installed annually, the government had aimed to increase this figure to 250,000 by 2030. Under the new plan, funding for the scheme will only rise in line with inflation rather than increasing from £400m this year to over £700m by 2029-30 as previously intended. Consequently, ministers acknowledge that the number of installations is likely to stagnate or grow much more slowly.
Andrew Sissons, a director at the research charity Nesta, stated that after Wednesday's announcements, it is very difficult to see how clean heating targets can be met. He noted the possibility that a Labour government could become the first to miss the targets it signed up to within the current carbon budget. Ed Matthew, director of the UK programme at thinktank E3G, described the situation as frustrating, highlighting that the UK is already behind other countries in rolling out heat pumps and requires a significant change in uptake to catch up.
Beyond heat pump subsidies, the cuts affect other key initiatives once championed by Miliband. These include approximately £250m cut from the warm homes plan, £500m from hydrogen schemes, and £200m from funding for carbon capture and storage technology. Additionally, Healey announced that future renewable projects will only be approved if they can demonstrate cost reductions and readiness to connect with the grid. While officials insist the government remains committed to having clean power by 2030, many experts believe this goal is now impossible under the new system.
Paul Ovenden, a former adviser to Keir Starmer, characterized the move as raiding energy capital budgets to fund defence, describing it as picking the bones of Miliband's project. He suggested that Miliband's absence from the department allowed this shift to occur, noting that he had previously won arguments against such cuts while in post. However, allies of Miliband and Fahnbulleh maintain that the green agenda remains strong. They point to Healey's announcement of a long-term move to shift green costs from consumer bills to taxpayers, as well as plans to decouple electricity prices from gas prices, as evidence of continued commitment to affordability and clean energy.
A spokesperson for the energy department defended the strategy, citing considerable progress over the last two years with £110bn in private-sector investment announced. The department stated it remains committed to maximizing homegrown clean power and meeting heat pump targets to protect consumers from volatile fossil fuel prices. Nevertheless, a government source admitted this represents the most significant shift in energy policy since taking office, emphasizing that the focus has moved towards cost rather than just building capacity to hit green targets.
Sources: The Guardian Politics.