The idea is said to be one of a number of options being considered as part of Ed Miliband’s £15 billion Warm Homes Plan, which is due to be unveiled in the new year
Households with gas boilers could be slapped with a new green tax to fund the transition to heat pumps. This proposal is rumoured to be among several being considered under Ed Miliband’s ambitious £15 billion Warm Homes Plan.
The speculated levy, which could add around £30 annually to gas bills, is one of many options on the table as the Energy Secretary gears up to launch his flagship homes and insulation initiative in the new year. While ministers have yet to confirm any such charge, the mere suggestion has already ignited controversy, with detractors arguing it would unfairly burden millions of ordinary families who depend on gas for heating.
Under the proposed scheme, gas users would essentially subsidise lower electricity bills, making heat pumps more appealing by reducing the cost difference between gas and electricity. At present, electricity costs households roughly four times more per unit than gas, a discrepancy ministers believe is stalling the shift to low-carbon heating.
Mr Miliband reportedly aims to level out these costs as part of Labour’s drive away from volatile-priced gas towards renewable energy, which ministers maintain will be cheaper in the long run.
These rumours surface after Chancellor Rachel Reeves axed the Energy Company Obligation (ECO), a £1.3 billion-per-year programme funded through levies on energy bills that covered insulation and modern heating systems.
This shift resulted in typical annual gas bills dropping by roughly £30 per household – savings that detractors argue could be wiped out should a fresh levy be brought in. Green energy mogul and Labour backer Dale Vince cautioned that any additional charge on gas would disproportionately hammer less well-off families.
“It impacts the people that can least afford their bills, let alone dream of a heat pump,” he said.
“If you get a government subsidy for a heat pump, you still need to find £7,000 yourself. [The government thinks] if we start putting up the gas bills of everybody, so that a few people can have heat pumps, we’ll make heat pumps more economic. I just think that’s wrong.”
In stark contrast, Jack Richardson, head of policy at Octopus Energy, hailed the shift as overdue, branding recent reforms as “the biggest moves in the right direction in 20 years”.
Ms Reeves has also ditched the renewables obligation – a levy previously slapped solely onto electricity bills – insisting the joint impact of scrapping this alongside ECO would slash £150 from energy bills come April. Yet experts caution that fresh charges for expanding the national grid and maintaining gas infrastructure are set to obliterate most of these projected savings.
Independent research indicates that despite government rebates, households might still face steeper power costs by the decade’s end compared to when Labour assumed power last year. Mr Miliband’s Warm Homes Plan, with a budget nearing £15 billion, is designed to reduce carbon emissions and enhance energy efficiency across the 30 million homes in Britain.
The plan includes discussions around low- or zero-interest loans for solar panels, heat pumps and batteries, ongoing subsidies for heat pumps until the end of parliament, grants for less affluent households, and funding for local councils to invest in local energy schemes. While an outline of the plan – as reported by the Times – is anticipated within weeks, ministers maintain that no final decisions have been made yet.
A government spokesperson said: “This is speculation. We are investing an additional £1.5 billion into our Warm Homes Plan, taking it to nearly £15 billion – the biggest ever public investment to upgrade homes and tackle fuel poverty. We are doubling down on support for home upgrades and will set out our plans to help households, and support thousands more clean energy jobs, soon.”
