Chancellor Rishi Sunak’s Spring Statement has been welcomed by low carbon heating providers but criticised for lacking any cuts to spiralling household energy bills.
The Heat Pump Association said it was pleased to see the government commit to abolishing the 5% VAT on energy efficiency measures as part of the Spring Statement. It said this VAT cut will help to improve energy security and resilience and complement the Boiler Upgrade Scheme offering grants between £5,000-£6,000.
Phil Hurley, chair of the Heat Pump Association, said: “The Spring Statement comes with great news for the heat pump industry and households today. The HPA has been working hard behind the scenes calling for financial incentives to tackle the barriers to heat pump uptake, and the decision to cut VAT from 5% to zero on energy-saving measures is an important step forward. Whilst this decision alone will not be enough to enable all households to access technologies such as heat pumps, we are confident that it will play a role in helping to accelerate the switch to low carbon heat. But we must remember that more steps still need to be taken to support the rollout of heat pumps, including the removal of illogical environmental levies on electricity.”
Carl Arntzen, CEO of Worcester Bosch, added: “We welcome the Chancellor’s removal of VAT on heat pumps, solar panels and other energy-efficiency measures. We feel that this will support the needed transition of UK homes towards a net zero future.
“One of the main barriers for consumers looking to install greener heating technology at home is the cost, so the savings this tax relief could bring may help counteract this, whilst contributing to an increased uptake of these types of measures.
“As the more specific details start to appear following today’s initial Spring Statement, it will be interesting to see whether the 5% tax relief is for the products and materials, or, as we would hope, applies to the total cost of installation, as around 60% of the cost of a heat pump installation is on ancillaries and labour.”
Mike Foster, CEO of the Energy and Utilities Alliance (EUA), said the chancellor had not heard the outcry over rocketing energy bills faced by millions.
He said: “He has done nothing in the Spring Statement to help the vast majority of consumers who face bills doubling this year. His VAT cut on solar panels and heat pumps will be welcomed by those who make them and by those who can afford to fit them, but a VAT cut on energy bills would have helped everyone.
“Frankly, consumers waiting to hear good news on their energy bills will be left asking ‘Is that it chancellor?’”