Heat Pump Grant Cuts Threaten Savings for Thousands of UK Households

The government is planning to slash the £2.7 billion budget of the Boiler Upgrade Scheme (BUS), a flagship element of the Warm Homes Plan. The proposal would sharply reduce the up-to-£9,000 grants that help households replace gas boilers with electric heat pumps. Officials have linked the savings from the cut to funding increased defence spending.

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Since its launch, the BUS has supported the installation of almost 80,000 heat pumps, delivering an average annual energy-bill saving of about £230 per household. A 2026 evaluation report found that 56 % of participants had a gross income above £52,000, compared with a national median of £54,740, while 37 % earned between £20,800 and £52,000. The scheme is not means-tested, and the average cost of a full boiler replacement remains around £5,000 for households.

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Andrew Sissons, director of sustainable future mission at Nesta, warned that an abrupt end could “wipe out” the emerging industry. Jonathan Bean, spokesperson for Fuel Poverty Action, described cutting the BUS to fund weapons as “flawed” and urged a fairer Warm Homes Plan. Simon Francis, co-ordinator for the End Fuel Poverty Coalition, said voters would feel betrayed if the plan is not fully delivered, and suggested a referral route to target the most vulnerable. Greg Jackson, founder and CEO of Octopus Energy, labelled the move “remarkably short-sighted.”

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• “You have to make sure you don’t do anything drastic… because otherwise companies who’ve invested in it will just say, ‘Well, no, actually this is clearly not the right market for me’,” — Andrew Sissons, director of sustainable future mission at Nesta

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• “Government belatedly added air-to-air heat pumps to the scheme, which are better for smaller homes, but only offers a £2,500 subsidy compared to the current £9,000 for homes with oil.” — Simon Francis

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The Energy Company Obligation (ECO4) scheme, which fully funds heat pumps for low-income and vulnerable households, is set to end on 31 December. Critics argue that without targeted support, the cut could leave many families without the projected £230 annual savings and could undermine the heat-pump market just as the UK seeks to meet its climate targets. Calls for a more nuanced approach—such as fully funding heat pumps for lower-income homes and preserving subsidies for smaller, electric-only properties—are intensifying as the deadline approaches.

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