Britain is likely to miss its green heating targets following the budget cuts announced by Chancellor John Healey this week, experts have warned, as critics claim the pro-renewables agenda pushed by former energy secretary Ed Miliband is being dismantled.
Healey unveiled more than £3bn of cuts to the energy department's budget on Wednesday, with much of the savings redirected to pay for higher defence spending under the government's defence investment plan.
One of the main casualties is the boiler upgrade scheme, which subsidises households to replace gas boilers with electric heat pumps. The scheme will lose £741m, and ministers confirmed its funding will now rise only in line with inflation rather than increasing as previously planned.
A typical household can currently claim £7,500 towards a heat pump, with about 60,000 being fitted in existing homes each year. The government has a target of raising that to 250,000 a year by 2030 and had planned to increase the scheme's funding from £400m this year to just over £700m by 2029-30. Installations are now expected to stagnate or grow far more slowly.
Andrew Sissons, a director at the research charity Nesta, said: "After the cuts announced on Wednesday, it is very difficult to see how we can hit our clean heating targets. It is even possible that a Labour government will be the first to miss the targets it has signed up to in the current carbon budget."
Ed Matthew, the director of the UK programme at the thinktank E3G, was also critical. "It's disappointing, so frustrating," he said. "We are behind a lot of other countries in rolling out heat pumps and we need a sea change in take-up to change that."
The heat pump reductions came alongside about £250m of cuts to the warm homes plan, £500m from hydrogen schemes and £200m from carbon capture and storage funding, all projects once championed by Miliband. Healey also announced that renewable projects would in future be approved only if they could be shown to bring costs down and were ready to connect to the grid. Officials insist the government remains committed to having clean power by 2030, though many experts believe that will be impossible under the new system. One government source called it "probably the most significant shift we have seen in energy policy since we came to office", adding: "The emphasis now is on cost, not just building to make sure there is enough capacity to hit our green targets."
Paul Ovenden, a former adviser to Keir Starmer, described the move as "the bones of Ed Miliband's project being picked clean". He said raiding energy budgets to fund defence had been discussed in government before, but that Miliband had always won that argument. "Had he not helped to oust Starmer and Reeves, he'd probably be in post still and it wouldn't have been possible," Ovenden added.
Allies of Miliband and his successor as energy secretary, Miatta Fahnbulleh, insisted the green agenda remained intact, pointing to a long-term move to shift green costs away from bills and on to taxpayers, and to planned market changes so electricity prices are no longer so closely tied to gas prices. "Ed and Miatta have both made affordability their focus. It would be wrong to suggest that prioritising cost is in any way a shift away from the green agenda," one source said. A spokesperson for the energy department said £110bn of private-sector investment had been announced over the past two years and enough clean power secured for more than 20m homes, adding: "We are committed to making the most of clean, homegrown power and meeting our heat pump target to protect consumers from volatile fossil fuel prices."
