The Regulatory Policy Committee (RPC) raised concerns over the Government’s justification for increasing targets from 6% to 8%, warning that the case for tightening the scheme has not been clearly made.

The assessment underpinning the policy shows that households could be left worse off overall, with the transition from gas to electricity driving higher costs that are not fully offset by efficiency gains.

The not for profit trade body, Energy and Utilities Alliance (EUA), said the findings should prompt Ministers to pause the policy before imposing further costs on consumers and industry.

“Families should not be asked to pay for policies that are not properly thought through”

Speaking at the annual general meeting of the European Heating Institute last week, Mike Foster, Chief Executive of EUA, said:

“This is a policy that increases costs for households, yet the Government cannot clearly explain why it is necessary to tighten the scheme at this stage. Ministers should not be asking families to pay more when the evidence base is incomplete and the benefits are not robustly demonstrated.”

Unclear targets and incomplete analysis

The Government has increased the target from 6% to 8% despite evidence of falling demand and rising costs. The government’s own watchdog also highlighted gaps in the analysis, including:

• Limited justification for increasing targets beyond the current 6%
• Insufficient assessment of impacts on small and medium-sized businesses
• Weak evidence on environmental and health benefits
• Lack of clarity on how the policy’s success will be measured

EUA warned that proceeding without resolving these issues risks creating unnecessary costs for consumers, uncertainty in the heating market and a lack of confidence in the government that needs the heating industry to invest to meet government ambitions.

“Policy by ambition, not evidence”

Mike Foster added:

“What we are seeing here is policy being driven by ambition rather than evidence. The Government cannot point to any success of the CHMM other than increasing the cost of a boiler relative to that of a heat pump. As we have said before, the policy is aimed at increasing supply of a product, when we already have mountains of unsold heat pumps. What the policy should aim for is increasing demand.”

Call for pause and reassessment

EUA is calling on Ministers to scrap the CHMM policy and pledge not to re-introduce it.

“Decarbonising heat is an important objective,” said Foster. But it must be done in a way that is affordable, proportionate and grounded in evidence. Until that standard is met, this policy should not proceed.”