UK heat pump installers brace for subsidy cuts in Wednesday's budget

Three quarters of the customers at Sustain Homes in Watford pay for their heat pumps with government grants — and the firm's operations director does not know how the business survives if that money disappears in Wednesday's budget. Bill Tuck, who has installed air source heat pumps for six years, said the expected cut is coming at the worst possible moment for a trade that has only just won over skeptics.

"Now, the conversation is completely different," Tuck said of his fellow heating engineers. "I'm getting approached by them saying: 'Mrs Jones, my customer for 15 years, she's enquiring about a heat pump. What can you tell me?' The whole narrative has changed."

The government is understood to be slashing the money available to subsidise heat pumps as it hunts for savings in the budget. Installers say the move would undercut a market that the state itself spent three years building.

What is actually being cut?

The boiler upgrade scheme (BUS), launched in 2022, provides upfront grants worth up to £9,000 to help property owners replace fossil fuel and direct electric heating with low-carbon alternatives such as heat pumps and biomass boilers. Roughly £9,000 per household is the difference between a subsidized switch and, by one installer's account, a £15,000 heat pump versus a £3,000 replacement boiler.

The stakes are large in emissions terms. Heat in buildings accounts for nearly a fifth of the UK's greenhouse gas emissions, according to the latest government data. The Department for Energy Security and Net Zero has called the 2020s a "critical decade for decarbonising heat" — yet the UK has 3.5 heat pumps installed per 1,000 households, against 632 in Norway, the global leader. In plain terms: Britain has installed less than one-hundredth of the market penetration achieved by the country at the front of the pack.

What happened the last time support was withdrawn?

Adam Killa, founder of Ask Renewables in Burscough, Lancashire, has seen this film before. When the Renewable Heat Incentive — a scheme that paid households for generating clean heat — closed in 2022, his order book collapsed.

"As soon as that stopped, we went from doing six, seven, eight [installs] a week down to zero," Killa said. "The customers say: 'Well, I know they're good, but 15 grand – I can buy a new boiler for three grand. What's the point?'"

The demand, in other words, was never standalone; it tracked the subsidy. That precedent is why installers treat the budget rumours as existential rather than incremental.

Who else is exposed?

The damage would not stop at fitting companies. According to the Heat Pump Association, about a third of heat pumps sold in the UK in 2024 were produced domestically, meaning manufacturers and their supply chains share the risk.

"This isn't just down to us fitting the heat pumps, it's the people delivering them, it's the people manufacturing them, it's all the associated trades that go with it that make the little bits, the little bobs, everything," said Jim Lacey, who has installed renewables through JLN Plumbing & Heating for 20 years. "There's so many knock-on effects."

Lacey was blunt on consumer behaviour: "No one's going to save the planet if it really hits their pocket." He noted that the current sales pitch — a heat pump costs only a few hundred pounds more than a boiler once subsidized, and saves on energy use — collapses without the grant. "That whole argument's gone."

Apprenticeships are also on the line, installers say, at a time when the government says it wants more young people earning while learning. "Unless we start bringing the young generation through, we're going to have a huge lack of installers, repair engineers, and more importantly, heat pumps as well," Tuck said.

James Meadway, economist and co-director of the green thinktank Verdant, argued the cut would work against Andy Burnham's push to effectively reindustrialise Britain. "It's at a point where his blank spot on climate is working hard against other things he wants to do," Meadway said.

What has the government said?

A government spokesperson declined to engage with the specifics: "We do not comment on budget speculation." The spokesperson added: "We remain committed to bringing down bills for families now, while investing in the clean, homegrown energy and warmer homes that will protect households from volatile fossil fuel prices for good."

Notably, no minister has addressed the apparent tension between that commitment and a cut to the main subsidy for low-carbon heating. Lacey said he never expected the grant to last forever, but assumed it would taper as the technology got cheaper. "But to suddenly axe some off the BUS grant or get rid of it completely is just catastrophic for all of the work that we've put in so far," he said. Wednesday's budget will decide whether a subsidy-supported industry becomes a subsidy-dependent casualty.