New data shows Clean Heat Market Mechanism is punishing households while failing on its core objective, according to the Energy and Utilities Alliance (EUA).
The Clean Heat Market Mechanism (CHMM), which created a ‘boiler tax’ in April 2025, was designed to force boiler manufacturers to sell more heat pumps or pay fines.
Those fines are being passed directly onto households, the EUA said this week, adding to the cost of replacing boilers during an already acute cost-of-living crisis.
Mike Foster, CEO of EUA, said: “Instead of stimulating demand, the CHMM has delivered higher costs with declining installations – the opposite of what Ministers promised. A tax on boilers that does not deliver heat pumps.”
The CHMM operates by penalising manufacturers that miss government set heat pump targets, fines which are spread across all boiler sales. This has translated into a boiler tax of around £27 per unit from April 2025, rising to £36 per boiler this year as government targets were increased.
Mike added: “Even after the full subsidy, households still face thousands of pounds in additional costs, alongside disruption and energy bill uncertainty. It is therefore no surprise that forcing manufacturers to sell heat pumps does not force households to buy them.
“Despite missing its own heat pump sales targets in 2025–26, the government has responded not by fixing the policy, but by raising targets again for 2026–27, automatically increasing penalties and the boiler tax yet further.
“This approach punishes consumers for government failure, while doing nothing to address the structural weaknesses in the heat pump market. The CHMM should be scrapped. The evidence is now clear: MCS heat pump installations are falling, not rising; boiler costs are increasing for all households thanks to the boiler tax; the policy ignores consumer economics; the cost of living crisis is being made worse; the policy is not delivering heat pump deployment.
“The Clean Heat Market Mechanism is economically illiterate, socially unfair and politically reckless. If the Government is serious about decarbonising heat, it must scrap the CHMM immediately and replace it with policies that tackle upfront and running costs honestly; focus on demand side reality, not Whitehall targets and stop penalising ordinary families for policy failure. Doubling down on a failed policy will not deliver net zero, it will only deepen public resistance and erode trust.”