According to industry sources, ministers are preparing to enforce heat pump sales targets next year, potentially leading to a “boiler tax” on households.
Ed Miliband, the Energy Secretary, is expected to roll out the policy from April, despite concerns that it could increase the cost of new boilers. Under the proposal, boiler manufacturers would face significant fines if they fail to meet annual heat pump sales quotas. Manufacturers have warned that this could add up to £180 to the price of a boiler, though some campaigners accuse them of profiteering.
Insiders told The Telegraph that officials have informed the industry the scheme will definitely be introduced next year, though a government source claims no final decision has been made.
The Clean Heat Market Mechanism (CHMM) would require boiler makers to sell a certain percentage of heat pumps as part of their overall sales. Initially developed by the Conservative government, the plan was delayed earlier this year following public opposition.
Shadow energy secretary Claire Coutinho postponed the policy’s introduction until at least next April, signaling she wanted to abandon it.
“I scrapped this policy last year because I felt it needed to be reconsidered,” Coutinho said. “It’s a policy catering more to the green lobby and vested interests than to consumers.
“It will raise boiler costs for ordinary families, potentially by hundreds of pounds, at a time when many can’t afford heat pumps. If Labour pushes ahead with this, alongside cutting the Winter Fuel Payment, it will further undermine their promises of reducing bills for consumers.”
Mr. Miliband is now expected to revive the policy, with industry sources reporting that his department has informed them the heat pump targets will be introduced next year. Manufacturers and suppliers have been notified that legislation to implement the scheme is set to be tabled in November, with an anticipated start date in April.
An industry insider said: “Ministers and officials have been in discussions with boiler manufacturers regarding the introduction of the CHMM in 2025. However, the exact details of the fines have not been finalized. There’s still a debate over whether the penalty level is appropriate.”
According to the Tory plans inherited by Mr. Miliband, manufacturers would need to ensure that at least six percent of their overall sales consist of heat pumps. For each missed target, a £3,000 fine would be imposed, and companies have warned they may have to pass these multi-million-pound penalties onto customers.
Industry experts have expressed concerns that demand for heat pumps, which are significantly more expensive than boilers, is currently insufficient to meet these targets.
A second source confirmed that “as far as we know, the CHMM is still scheduled to start in 2025,” but noted that there has been limited engagement from officials. They added that manufacturers are hopeful ministers might reconsider or amend the punitive measures of the policy.
Each year, around 1.5 million new boilers are installed, most during the winter months when they are in high demand. It’s estimated that around 25 percent of these installations—approximately 375,000 a year—are in pensioner households, many of which have recently lost the £200 winter fuel allowance.
Boiler manufacturers temporarily increased their prices by £120 last January when they anticipated a four percent target for heat pump sales. However, they reversed the price hike and issued refunds when the policy was delayed.
Industry insiders suggest that if Mr. Miliband proceeds with the proposed six percent target this year, it could lead to a £180 price increase this January.
Some environmental groups have accused boiler manufacturers of using the policy as a pretext for “price gouging” and exaggerating its impact.
Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, stated: “The so-called boiler tax was a self-imposed price hike by manufacturers, intended to resist heat pump policies so they can continue selling gas boilers for longer.
“If the UK doesn’t transition away from gas boilers, we’ll have to import more gas from abroad as North Sea production declines, making this an issue of energy security.”
Andy Manning, head of energy systems transformation at Citizens Advice, added: “Boiler manufacturers should not raise prices again in response to a scheme that helps homes switch to clean energy. Instead, they should focus on meeting the scheme’s targets.
“If the Clean Heat Market Mechanism is reintroduced, the Government must not weaken it in response to pressure from manufacturers. Doing so would reward actions that left consumers paying more and keep us reliant on volatile gas prices for longer.”
