The idea is reported to be one of a number of proposals being discussed as part of Ed Miliband’s £15 billion Warm Homes Plan
Households with gas boilers could be hit with a new green levy to help subsidise a switch to heat pumps. The idea is reported to be one of a number of proposals being discussed as part of Ed Miliband’s £15 billion Warm Homes Plan.
The mooted charge – said to be put around £30 a year on gas bills – is one of a number of options under consideration as the Energy Secretary prepares to unveil his flagship homes and insulation drive in the new year.
Ministers are yet to confirm any such levy, but the idea has already sparked a row, with critics warning it would amount to penalising millions of ordinary families who rely on gas to heat their homes.
Under the reported plans, gas users would effectively help fund lower electricity bills, making heat pumps appear more attractive by narrowing the price gap between gas and power.
The idea is reported to be one of a number of proposals being discussed (Image: Getty)
Electricity currently costs households around four times more per unit than gas, a disparity ministers argue is holding back the switch to low-carbon heating.
Mr Miliband is said to want to rebalance those costs as part of Labour’s push away from gas – whose price is seen as volatile – towards renewable energy, which ministers insist will be cheaper in the long run.
The speculation comes after Chancellor Rachel Reeves scrapped the Energy Company Obligation (ECO), a £1.3 billion-a-year scheme funded through levies on energy bills that paid for insulation and modern heating systems.
That move meant average annual gas bills fell by about £30 per household, savings that critics say could now be clawed back if a new levy were introduced.
Green energy entrepreneur and Labour donor Dale Vince warned that any new charge on gas would hit poorer households hardest.
“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.”
By contrast, Jack Richardson, head of policy at Octopus Energy, said the direction of travel was long overdue, describing recent changes as “the biggest moves in the right direction in 20 years”.
Ms Reeves has also scrapped the renewables obligation, a cost applied only to electricity bills, claiming the combined effect of that decision and ending ECO would take £150 off energy bills from April.
However, analysts warn that new charges to expand the national grid and maintain gas infrastructure are likely to wipe out much of those savings.
Separate analysis suggests that even after government discounts, households could still be paying more for power by the end of the decade than when Labour came to office last year.
Mr Miliband’s Warm Homes Plan is intended to cut carbon emissions and improve energy efficiency across Britain’s 30 million homes, with funding of almost £15 billion.
Proposals being discussed include low- or zero-interest loans for solar panels, heat pumps and batteries, continued subsidies for heat pumps until the end of the parliament, grants for poorer households, and funding for councils to invest in local energy schemes.
An outline of the plan – reported by the Times – is expected within weeks, but ministers insist no final decisions have been taken.
A government spokesman 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.”
