The government is understood to be cutting subsidies for heat pump installations ahead of Wednesday's budget, threatening the viability of businesses that have invested in the growing renewable heating sector. The boiler upgrade scheme, introduced in 2022, provides upfront grants worth up to £9,000 to help property owners replace fossil fuel heating systems with low-carbon alternatives such as heat pumps and biomass boilers. About 75 per cent of customers at Sustain Homes in Watford use government subsidies to pay for their pumps, according to Bill Tuck, the company's operations director. He said the cuts would be extremely damaging, adding: "It's going to damage us as a company. It's the foundation of the business. If that's to go, it's extremely damaging."
Heat pump installers say the removal of subsidies will undermine the financial case for switching from conventional boilers. Jim Lacey, who has installed renewables for 20 years through his business JLN Plumbing and Heating, said customers currently save money on energy usage despite higher upfront costs. "No one's going to save the planet if it really hits their pocket," he said. "We can go in now and go: 'It's a few hundred pound more than having a normal boiler, but you save so much on your energy usage.' That whole argument's gone." Adam Killa, founder of Ask Renewables in Lancashire, pointed to what happened after the 2022 closure of the Renewable Heat Incentive scheme, when his business went from completing six to eight installations a week to zero. "Customers say: 'Well, I know they're good, but 15 grand - I can buy a new boiler for three grand. What's the point?'"
The sector also faces challenges with training and manufacturing. Heat pump installers warn that subsidy cuts will jeopardise apprenticeships and the future pipeline of skilled workers. According to the Heat Pump Association, about a third of heat pumps sold in the UK in 2024 were produced domestically, meaning cuts could affect manufacturers as well as installers and associated trades. Lacey said he had expected subsidies to phase out gradually as technology became more widespread and production costs fell, but not to be suddenly axed. "To suddenly axe some off the BUS grant or get rid of it completely is just catastrophic for all the work that we've put in so far," he said.
The UK currently lags far behind other European countries in heat pump adoption. Norway, the global leader, has 632 heat pumps installed for every 1,000 households, while the UK has 3.5, according to government data. Heat in buildings is responsible for approximately a fifth of the UK's greenhouse gas emissions, the latest government figures show. The Department for Energy Security and Net Zero has previously described the 2020s as a "critical decade for decarbonising heat". A government spokesperson said: "We do not comment on budget speculation. We remain committed to bringing down bills for families now, while investing in the clean, homegrown energy and warmer homes that will protect households from volatile fossil fuel prices for good."