Healey’s budget cuts put UK green heating targets at risk

Britain is unlikely to hit its green heating targets after Chancellor John Healey cut more than £3bn from the energy department’s budget. The reductions, announced on Wednesday, are part of a wider shift in government priorities that critics say is dismantling the green agenda once championed by former energy secretary Ed Miliband. The most significant casualty is the boiler upgrade scheme, which offers households £7,500 towards replacing a gas boiler with an electric heat pump. Its funding will now rise only in line with inflation, rather than the planned increase from £400m this year to just over £700m by 2029-30. That means installations are likely to stagnate or grow far more slowly than needed to reach the target of 250,000 heat pumps a year by 2030. Andrew Sissons, director at research charity Nesta, warned: “After the cuts announced on Wednesday, it is very difficult to see how we can hit our clean heating targets. It is even possible that a Labour government will be the first to miss the targets it has signed up to in the current carbon budget.”

Defence spending drives the cuts

The energy department’s budget is being raided to help fund a new defence investment plan. Alongside the heat pump subsidy cuts, there are around £250m in reductions to the warm homes plan, £500m from hydrogen schemes, and £200m from carbon capture and storage technology. All were once projects championed by Miliband.

Healey also announced that future renewable projects will only be approved if they can show they bring costs down and are ready to connect to the grid. Officials insist the government remains committed to its clean power by 2030 target, but many experts believe that target is now impossible. A government source said: “This is probably the most significant shift we have seen in energy policy since we came to office. The emphasis now is on cost, not just building to make sure there is enough capacity to hit our green targets.”

Political fallout and green agenda debate

Paul Ovenden, a former adviser to Keir Starmer, said the cuts show “the bones of Ed Miliband’s project being picked clean.” He noted that Miliband had always won this argument when he was in post, but now he’s not in the department, it’s happened. Ovenden added that had Miliband not helped oust Starmer and Reeves, he’d probably still be in post and the cuts wouldn’t have been possible.

Allies of Miliband and his successor Miatta Fahnbulleh insist the green agenda remains strong. They point to Healey’s long-term move to shift green costs from bills onto taxpayers, and plans to change energy markets so electricity prices are less tied to gas prices. A source close to both energy secretaries said: “Ed and Miatta have both made affordability their focus. It would be wrong to suggest that prioritising cost is in any way a shift away from the green agenda.” An energy department spokesperson said: “Over the last two years, we have made considerable progress, thanks to the momentum of clean power 2030, seeing £110bn of private-sector investment announced and securing enough clean power for over 20m homes.” The spokesperson added: “We are committed to making the most of clean, homegrown power and meeting our heat pump target to protect consumers from volatile fossil fuel prices.”