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An On the wire story
The UK’s main heat pump trade body has said the Budget has dented confidence in the sector, warning that a mix of fiscal decisions risks slowing the market just as ministers are trying to accelerate the shift away from fossil-fuel heating.
HPA UK chief executive Charlotte Lee said the package has added uncertainty at a sensitive moment for an industry that has been hoping for clearer signals on long-term policy support.
Lee’s criticism focused on two measures in particular: the return of 5% VAT on qualifying heat pump installations from April 2027 and the decision to keep the Boiler Upgrade Scheme at current levels rather than increasing support more sharply.
HMRC guidance confirms the VAT change, which will end the present temporary zero-rate relief for qualifying domestic energy-saving installations at the end of March 2027, while the Government’s Budget document says the Boiler Upgrade Scheme will remain at £400 million in 2027–28 before rising broadly in line with inflation.
Speaking for HPA UK, Lee argued that the combination of higher tax and restrained grant spending could interrupt market momentum and discourage manufacturers, installers and investors from expanding capacity.
She described the VAT move as reckless in the context of continued energy insecurity, and said freezing the grant budget could create a pause in demand before the wider Warm Homes Plan is fully in place.
The association did welcome the new Warm Homes Loan Scheme, which the Government says will help households meet the upfront cost of low-carbon upgrades. But Lee said cheaper finance alone will not be enough to deliver the scale of adoption needed if electricity remains too expensive relative to gas.
HPA UK also said the Budget offered little to help businesses electrify, beyond limited support through the British Industrial Competitiveness Scheme.
The sector’s concerns come against the backdrop of the Government’s wider ambition to push annual heat pump installations beyond 450,000 by 2030, a target set out in the Warm Homes Plan.
Ministers say the plan is intended to support home upgrades and clean heating while helping household energy bills and boosting domestic supply chains. HPA UK, however, argues that the policy mix now needs clearer direction and stronger incentives if that target is to translate into sustained commercial growth rather than another short-lived boom.
References
Main reference: Cooling Post: [1]
• This On the wire article was created using Noahwire AI and reviewed by CIBSE Journal’s editorial team
