UK Government Considers Heat Pump Subsidy Cuts to Help Pay for Defence Boost

The UK government is preparing to reduce funding for heat pump subsidies as ministers search for savings to help finance a £15 billion increase in defence spending over four years.

According to The Guardian, Energy Secretary Miatta Fahnbulleh has been tasked with identifying more than £2 billion in savings from her department’s budget. Part of the reduction is expected to come from the Boiler Upgrade Scheme, which helps households in England and Wales replace traditional gas boilers with cleaner heating systems.

The scheme currently provides grants of up to £7,500 towards an eligible heat pump installation, with some off-grid properties qualifying for as much as £9,000. Since its introduction in 2022, it has supported nearly 80,000 installations. However, sources cited by the newspaper say ministers are considering cutting hundreds of millions of pounds from the programme’s £2.7 billion budget rather than scrapping it completely.

The possible cuts have raised concerns among environmental campaigners and businesses operating in the heat pump industry. Critics argue that reducing financial support could discourage households from switching away from gas boilers, slow the growth of the domestic heating industry and make it harder for the UK to meet its climate commitments.

Madeleine Gabriel of Nesta, an innovation charity, argued that cutting support while households are facing renewed energy-price pressures would be counterproductive. Octopus Energy chief executive Greg Jackson also warned that reducing the scheme could damage an industry that is beginning to expand and bring installation costs closer to those of conventional gas boilers.

The government’s support scheme has helped reduce the upfront cost of installing heat pumps, although the technology remains expensive for many households. Supporters say the programme is not only helping families adopt cleaner heating but also encouraging investment, training and job creation in the UK.

However, questions remain over who benefits most from the grants. Treasury officials have reportedly viewed the scheme as disproportionately benefiting better-off households, while industry supporters argue that more than 40% of the funding has gone to households earning less than £52,000 annually.

The proposed reduction forms part of a wider effort to fund the UK’s defence investment programme. The government announced an additional £15 billion for defence over four years, with the funding plan requiring departments to identify savings and reprioritise spending. Official figures include £2 billion in savings from the Department for Energy Security and Net Zero over the period.  Other energy initiatives, including carbon capture and storage and green hydrogen projects, are also facing scrutiny as ministers examine where spending could be reduced.

The Department for Energy Security and Net Zero said savings for the defence investment plan represented a relatively small part of its overall budget, which had received a significant increase at the spending review. It said details of how the department would fund essential national security investment would be announced in the autumn.

The debate highlights the challenge facing the government as it tries to balance national security spending with climate targets, industrial development and household affordability. While ministers seek to meet defence commitments, businesses and environmental groups warn that cuts to clean-energy programmes could undermine efforts to reduce dependence on fossil fuels. No final decision on the precise reduction to the heat pump scheme was confirmed in the report. The government is expected to set out its funding plans as part of its wider spending decisions.