“Who will speak up for the taxpayer?”
31st Jan 2025
A recently released (30th January) publication from the Department of Energy Security and Net Zero, “An evaluation of the Boiler Upgrade Scheme” has prompted a leading energy industry trade body to ask the question, “Who will speak up for the taxpayer?”
Responding to the detailed findings of the report, Mike Foster, CEO of the trade body The Energy and Utilities Alliance (EUA) has highlighted the clear unfairness of the subsidy scheme, which offers little value to the taxpayer but plenty to well-off owners of large houses.
The scheme, introduced under the previous Conservative government, is expected to spend £1.9 billion subsidising the installation of heat pumps. However, Mr Foster argues its very designed is flawed in that the subsidy of £7500 only part funds the average installation cost of £13,200. The remaining £5700 is paid by the individual, putting the scheme out of reach for the vast majority of households who are funding the subsidy through the taxes they pay.
The evaluation found that half of homes subsidised (52%) had four or more bedrooms and that over half (57%) had an average household income of £57,000 or higher, compared to a UK median of £32,300. It also found huge deadweight cost, with 41 per cent of beneficiaries acknowledging that they would have fitted a heat pump without the subsidy in place. This amounts to a potential £880 million of taxpayers’ cash spent unnecessarily. Households benefitting from the scheme also admitted (63%) that they find it ‘easy or somewhat easy’ to pay their energy bills.
Commenting on the evaluation findings, Mike Foster said:
“Heat pump technology saves carbon compared to a gas boiler and if they were more affordable to buy and cheaper to run, then they would fly off the shelves. However, they aren’t, so government is heavily subsidising them with taxpayers’ cash. So, who is speaking up for the taxpayer to make sure their money is well spent?
The government’s own evaluation is clear, wealthy homeowners living in large homes who generally don’t struggle to pay their bills are the one taking advantage of the scheme, whilst millions struggle to pay their bills and taxes.
What the Treasury must surely look at though, is the deadweight cost to the taxpayer. If four in ten of those banking the £7500 would have invested in a heat pump anyway, why subsidise them? The deadweight cost of the scheme, at current trends, will amount to £880 million. I wonder what else that money could be spent on? How many teachers or nurses? How many police officers on our streets? How many pensioners could get help paying their energy bills? These are the questions that taxpayers need answering.
Everyone who benefits loves a subsidy. But who will speak up for the taxpayer who is funding the well-off to feel good about their carbon footprint, when families are forced to choose between eating and heating?
I would urge the Treasury to look closely at this report; recognise the waste and look out for the taxpayer. Voters will be watching how politicians respond.”
See the report here
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