Heat pump targets face axe over fears of ‘ boiler tax’ on consumers

MINISTERS are set to scrap targets that would lead to a ‘boiler tax’ after concluding they would do nothing to tackle climate change.

New targets, due to come into force in April, would require boiler manufacturers to ensure that heat pumps account for at least 4 per cent of their sales this year, rising to 6 per cent next year. Failure to hit the target would result in fines of £3,000 for each heat pump not sold.

The plans were designed to drive the industry towards government targets of installing 600,000 heat pumps a year by 2028. But with public demand for heat pumps still low, manufacturers warned they would have to raise prices for conventional gas boilers by up to £120 to cover the cost of the fines – a charge that has been dubbed the ‘ boiler tax’.

A Whitehall source yesterday confirmed that Energy Secretary Claire Coutinho is now poised to axe the target and focus instead on incentives to encourage people to switch to heat pumps.

The source said last year’s decision to increase the government grant for installing a heat pump from £5,000 to £7,500 had led to a 50 per cent surge in interest.

Boiler firms that have already increased their prices in anticipation of fines could be referred for investigation by the competition authorities.

The source said: ‘Boiler manufacturers have saddled families with indefensible price hikes - this is not right. We’re looking again at the policy and expect manufacturers to do the right thing and remove price hikes immediately.’

The move is the latest effort by ministers to slow the rush to Net Zero in an attempt to reduce the cost to consumers.