Ed Miliband has revived controversial plans for a ‘boiler tax’ in a bid to meet Labour’s eye-watering climate change targets.
The Energy Secretary has signed off on a proposal to impose swingeing taxes on boiler manufacturers if they fail to meet his targets for installing heat pumps – targets that industry sources have branded ‘unachievable’.
A similar plan was scrapped by the Conservative government this year after the sector warned it would add £120 to the cost of a new boiler – leading it to be dubbed the ‘boiler tax’.
But Mr Miliband, who toughened Britain’s climate change targets this month, yesterday revived the idea, prompting fears the price of a gas boiler will increase next year.
Tory energy spokesman Claire Coutinho, who scrapped the move while in government, condemned the move. She accused ministers of trying to force people to instal heat pumps by driving up the price of gas boilers.
‘Labour have quietly introduced a new tax on boiler companies that don’t sell enough heat pumps,’ she said.
‘It gives Ed Miliband open-ended powers to force heat pumps on people by making the price of gas boilers unaffordable.
Ed Miliband (pictured) has revived controversial plans for a ‘boiler tax’ in a bid to meet Labour’s eye-watering climate change targets
The Energy Secretary has signed off on a proposal to impose swingeing taxes on boiler manufacturers if they fail to meet his targets for installing heat pumps – targets that industry sources have branded ‘unachievable’ (stock image)
Mr Miliband’s department also slipped out new guidance that will allow people to install a heat pump less than a metre from their neighbour’s boundary, despite warnings it will lead to a flood of complaints about noise (stock image)
‘The climate change lobby have been itching to get this on the statute book for years because it uses higher costs to force people to buy heat pumps. We need to put living standards first.’
Industry chiefs say the new targets for installing heat pumps are ‘unachievable’ because of high costs and public scepticism.
Mr Miliband’s department acknowledged that a majority of those responding to a consultation on the issue ‘did not support’ the target and that ‘several suggested the target was unachievable’.
But a government source said ministers had decided to press ahead regardless and were ‘confident that the target is realistic and achievable’.
Mr Miliband’s department also slipped out new guidance that will allow people to install a heat pump less than a metre from their neighbour’s boundary, despite warnings it will lead to a flood of complaints about noise.
Current limits on the size of the ugly boxes will also be removed as ministers try to spark a huge increase in installations.
And plans to ban the installation of gas boilers in new homes from next year will go ahead.
The last government set a target of installing 600,000 heat pumps a year by 2028. But a recent National Audit Office review of the scheme found that, despite heavy subsidies, in its first year in 2022/23 just 18,871 heat pumps were installed, far below the 50,000 target for that year.
By contrast, roughly 1.5 million gas boilers were installed, mostly to replace worn-out models.
Under the new target, which will come into force from April, at least 6 per cent of all domestic heating installations will have to be heat pumps – equal to around 90,000 new systems.
Indicative targets published by the Government suggest this will rise to 10 per cent the following year, 17 per cent the year after and 27 per cent – around 400,000 installations – in 2028.
However, the regulations leave Mr Miliband free to raise the targets even higher.
Firms that fail to install enough heat pumps will be hit with fines of £500 for every additional gas boiler they sell, rising to £3,000 the following year.
Mike Foster, of the Energy and Utilities Alliance, said: ‘The challenge the Government faces is not the lack of supply of heat pumps – you can buy one today if you want – it is the lack of consumer demand.
‘As officials have acknowledged, they cost considerably more to buy than a gas boiler; they cost more to run than a gas boiler and they are more disruptive to fit in the home compared to simply replacing a boiler.
‘These things need addressing.’ Sir Keir Starmer yesterday said the Government was right to unilaterally toughen Britain’s climate targets, requiring this country to cut emissions by 81 per cent by 2035.
But Tory leader Kemi Badenoch questioned the value of the target – and pointed out the PM had yet to publish a plan to hit it or said what it will cost to achieve.
She told MPs that the Government was putting ‘press releases before practicality’.
A DESNZ spokesman said: ‘These claims are simply false. This scheme does not require any increase to the price of boilers.
‘We are supporting manufacturers, giving them time to scale up supply chains and have lowered the payment by 80 per cent to £500 for any shortfall in heat pumps.’
What has Ed Miliband proposed?
From next April, boiler manufacturers will have to ensure that heat pumps account for at least 6 per cent of installations.
They will be fined £500 for every extra gas boiler over this limit, with the fines rising to £3,000 the following year.
The proportion of new heat pumps is also expected to rise the following year to at least 10 per cent.
How much will the cost of a new boiler go up?
Industry sources said this year that the plans would drive up the average price by up to £120 to cover the cost of paying new fines.
The Government yesterday cut the proposed fines from £3,000 to £500 for the first year.
But the level of heat pump installations required has risen from 4 per cent to 6 per cent.
Why are they doing this?
Heating accounts for 40 per cent of all gas use in the UK.
Mr Miliband’s target to cut UK emissions by 81 per cent by 2035 will require a big shift away from gas boilers over the next decade.
But the boiler industry says the plan will work only if ministers can persuade the public to embrace heat pumps.
Otherwise, it will simply push up the cost of gas boilers.
How is it going so far?
The National Audit Office found that just 18,871 new heat pumps were installed in 2022/23, compared with 1.5million new gas boilers.
But last year’s decision to raise the £5,000 installation grant by 50 per cent has led to a surge in interest, with a record 3,223 people applying for a grant in September.
Why has take up of heat pumps been so slow?
On average they are four times as expensive to install and remain more costly even after a government grant worth £7,500 is taken into account.
Critics claim they are also more expensive to run and struggle to produce enough heat in winter, although supporters insist these problems can be overcome with better insulation.
