Heat pump installations ‘should be paid for or subsidised by the Government’

The current rate of heat pump installation is “not cutting the mustard” and should be paid for or subsidised by the UK Government, the National Infrastructure Commission (NIC) has recommended.

The commission, in its recommendations covering the next five years, said a third of the lowest income households, including those living in social housing, should have their costs fully funded by £2.5 billion of annual investment.

Other property owners should be eligible to claim a £7,000 subsidy to put towards the installation of an electrified heating system, with the offer tapered down over time to encourage early take-up, if the UK’s 2035 carbon-cutting targets are to be met.

The commission also said 0% financing options should be available to help households with costs beyond that subsidy threshold, alongside planning reforms to make it simpler to install heat pumps.

Around eight million buildings will need to switch from gas boilers, which currently heat around nine in 10 English properties, to cleaner alternatives by 2035 to meet the UK’s 2050 net zero target, the commission said.

In its report, The Second National Infrastructure Assessment, published on Wednesday, the commission said heat pumps and heat networks “are the solution” to the environmental challenge.

“They are highly efficient, available now and being deployed rapidly in other countries,” it said.

Commission chairman Sir John Armitt said he found it “hard to accept” the Prime Minister’s assurances that the UK is on target to meet its carbon targets.

Rishi Sunak last month announced a number of changes to environmental policies, including stating that around 20% of households will be exempt from having to switch from gas heating to save them from the costs.

His critics said the reforms watered down the UK’s commitments but the Conservative Party leader has pledged the country “will still meet our international commitments and hit net zero by 2050”.

Asked whether he accepted Mr Sunak’s comments, Sir John told reporters: “We’ve got a 2035 target which is only 12 years away.

“I find it hard to accept that we are likely to meet that when we are installing 50-60,000 heat pumps at the absolute most per annum at the moment when the Government has set itself a target of 600,000 heat pumps per year by 2028.

“It is not cutting the mustard at the moment so therefore there has to be a significant improvement in order to achieve that 2035 (target).”

Sir John also pointed out that under changes brought in by Mr Sunak, fewer households will be able to claim support for heat pump costs.

As part of measures designed to reduce costs associated with the transition to net zero, the Prime Minister announced he would be increasing the grants available to replace gas boilers from £5,000 to £7,500 per household.

However, the £150 million overall cap on the scheme has not changed, meaning the number of households able to claim will reportedly drop from 30,000 to 20,000 per year.

In a briefing, Sir John said: “Fewer households have access to £7,500 than previously had access to £5,000.

“So our scheme, I would argue, is significantly more supportive of people making this change.

“We’re meeting the full cost for those in social housing and on lower incomes and we are topping up the grant for others by zero-cost financing.”

James Heath, the commission’s chief executive, said the UK was “way off” the target of switching eight million properties from fossil fuel heating systems in the next seven years — a transition his organisation said is likely to make fuel bills cheaper in the long run.

Nick Winser, a commission member, said the report states “unambiguously” that NIC does “not see any role for hydrogen in the future of home heating” in the sixth carbon budget, which covers the period 2033-2037.

He added: “It is simply not ready at scale to be used for heating.”

The NIC report said that, while infrastructure performs well “in some areas”, there are “significant deficiencies that are holding the UK back”, pointing out that no major reservoirs for water supply have been built in England in the past 30 years and recycling rates have “not increased in a decade”.

Sir John has previously called Mr Sunak’s decision to scrap the HS2 routes past Birmingham, including to Manchester, “deeply disappointing” — comments he said he stands by.

NIC’s report said the decision “leaves a major gap in the UK’s rail strategy around which a number of cities have based their economic growth”.

It said ministers needed to work on a “new comprehensive, long-term and fully costed plan that sets out how rail improvements will address the capacity and connectivity challenges facing city regions in the North and Midlands”.

The Department for Transport should also invest £22 billion to improve public transport in the largest regional English cities of Birmingham, Bristol, Leeds and Manchester to unlock economic growth, commissioners recommended.

Those four cities should be the “initial priorities for investment in mass transit systems”, the commission said.

With the 220-page report calling the national road network “essential” for connectivity, Sir John said he found the decision by the devolved Labour Welsh government not to build any major new roads “slightly puzzling”.

The commission said that, to fund overall infrastructure improvements, public sector investment will need to rise from £20 billion per year over the last decade to around £30 billion in the 2030s and 40s.

Our Network North plan will deliver the transport that matters most to people and we’re adopting a fairer and more pragmatic approach to meeting net zero that supports households and families to make greener choices whilst easing the burdens on working people

Treasury officials said ministers welcomed the NIC’s assessment and that it would be used to inform the Government’s long-term growth plans.

A Government spokeswoman said: “Delivering high-quality infrastructure is the foundation of our future growth.

“Our Network North plan will deliver the transport that matters most to people and we’re adopting a fairer and more pragmatic approach to meeting net zero that supports households and families to make greener choices whilst easing the burdens on working people.

“We are delivering over £600 billion of planned public sector investment in infrastructure, R&D (research and development) and defence over the next five years, including an unprecedented package to improve connections in our city regions and billions to decarbonise buildings.”

Officials at the Department for Energy Security and Net Zero said it was incentivising investment in the heat pump market, providing up to £30 million to support UK manufacturing in a bid to make the switch a more “attractive choice” for consumers.

Some £6.6 billion is being put into clean heat and energy efficiency, with a further £6 billion of new funding from 2025, the department added.

Darren Jones, Labour’s shadow chief secretary to the Treasury, said: “There is no doubt we need a transformation in the UK’s approach to infrastructure to drive investment and growth across Britain.

“However, after 13 years of economic failure and stagnation, the biggest obstacle to this report’s recommendations being implemented and to get our economy growing is the Conservative Party.”