Key facts
- Ministers are planning to cut heat pump subsidies to fund increased defence spending.
- The Boiler Upgrade Scheme in England and Wales, offering grants up to £9,000, will have hundreds of millions of pounds removed from its £2.7bn budget.
- The government is also expected to approve the Jackdaw gasfield this week.
- Critics argue the subsidy cuts will harm the British heat pump industry and climate goals.
- The energy department's capital budget is set to be cut by £2bn to contribute to defence spending.
Ministers are reportedly preparing to significantly reduce subsidies for heat pumps to help fund an increase in defence spending, according to sources speaking to The Guardian. Miatta Fahnbulleh, the energy secretary, has been tasked with finding over £2bn in savings from her department's budget to contribute to a planned £15bn rise in defence investment over four years.
A portion of these savings is expected to come from cuts to the Boiler Upgrade Scheme (BUS) for England and Wales, which offers grants of up to £9,000 to households switching to cleaner heating. While the scheme will not be abolished, hundreds of millions of pounds are anticipated to be cut from its £2.7bn budget. The BUS has supported tens of thousands of households in installing electric heat pumps.
Critics, including Madeleine Gabriel of Nesta and Greg Jackson of Octopus Energy, argue that reducing funding for heat pumps would damage the emerging British heat pump industry and undermine efforts to combat the climate crisis. They highlight the current energy crisis driven by high gas prices and the growing adoption of heat pumps.
Separately, ministers are also expected to give the go-ahead for the Jackdaw gasfield this week. The government had previously planned to spend £21.7bn on carbon capture and storage (CCS) until 2050, a technology supported by fossil fuel companies but criticised for its potential cost and effectiveness.
Energy officials stated that the savings for the defence plan represent a small part of the department's overall budget, which has seen significant growth. The cuts were agreed to by former energy secretary Ed Miliband under the then prime minister Keir Starmer. The chancellor, John Healey, who resigned as defence secretary in June, is now tasked with finding additional savings beyond what departments have already agreed.