Heat pump subsidies to be scaled back to fund defence

Tap a highlight to see why it matters.1 finding

Jump to content

Sections

UK Edition

Subscribe now

More from The Telegraph

Matt Oliver Industry Editor Show biography !Matt Oliver

Matt Oliver is The Telegraph's Industry Editor, covering manufacturing, energy policy, car making and the defence industry. He was previously a special correspondent and has reported on business for the Daily Mail and local government for the Oxford Mail. He can be reached at:

Published 12 October 2026 1:13pm BST

Save

This feature is available for registered users. Please register or log in to continue

RegisterLog in

Comment speech bubble icon 566

Copy link

Gift this article free

Gift article

Give full access to this article, free time. You have 15 articles left to gift, this month.

Copy link

Add us as preferred source

Matt Oliver Industry Editor Show biography !Matt Oliver

Published 12 October 2026 1:13pm BST

A heat pump subsidy scheme championed by Ed Miliband is facing cuts to help fund defence.

Labour’s £15bn Warm Homes Plan, launched by Mr Miliband just nine months ago, is reportedly expected to be scaled back as the Department for Energy Security and Net Zero (DESNZ) seeks to make £2bn in savings.

A £2.7bn subsidy scheme, providing £7,500 grants for people who purchase heat pumps under the boiler upgrade scheme, will be curtailed as part of the plans, according to reports in The Guardian and Politico.

Cuts come as John Healey, the Chancellor, scrambles to find billions of pounds to fund defence.

During the summer, No 10 and the Treasury were locked in a standoff with the Ministry of Defence about how to plug a hole of up to £28bn in the military’s 10-year equipment budget, known as the defence investment plan (DIP).

In the end, Sir Keir Starmer’s government provided an extra £15bn – but left £4.7bn of this to be found at a later date.

Mr Healey, who resigned as defence secretary in summer after the spending row, will now be tasked with funding that money at his first Budget as Chancellor on Oct 28.

Critics claimed the move to cut heat pump funding was “short-sighted” and said it would hobble the industry at a critical moment. Without the grant, a typical heat pump costs £13,600 to install, according to data provider MCS.

DESNZ budget cuts were agreed by Mr Miliband in the summer as Sir Keir, the former prime minister, was scrambling to cobble together funding for the badly delayed DIP.

But finding the savings will now fall to Mr Miliband’s successor, Miatta Fahnbulleh, after Mr Miliband was appointed Foreign Secretary by Andy Burnham.

Ms Fahnbulleh has signalled that she could row back on some of Mr Miliband’s most ambitious commitments amid concerns within Labour that rising energy costs are undermining support for net zero.

“My job is to do the transition in a way that works for people’s pockets,” she told The Times in August.

“Candidly, my job is to keep people with us ... And the way I do that is to say to people, we are doing the hard trade-offs to make sure that we are doing this transition in a way that still delivers affordability.”

Octopus Energy – Britain’s biggest energy supplier and its largest heat pump installer – warned that cutting funding for the grants would be “brutally damaging” just as “the market is taking off.”

The company said it had received 570,000 inquiries about heat pumps in the past 18 months.

Greg Jackson, the chief executive of Octopus, added: “Britain’s exposure to gas cost the Treasury £80bn in the last energy crisis. The boiler upgrade scheme budget is just 0.5pc of that, and is key to getting off gas.

“It’d be remarkably short-sighted to try to enhance our defence by cutting our path to security.

“It’d also put thousands of skilled jobs at risk – the very people making Britain safer and cleaner in every postcode.”

The Heat Pump Association, which represents the sector, declined to comment on “speculation”.

Dale Vince, the green tycoon and Labour donor, has urged ministers to cut funding for heat pumps and redirect the money towards defence.

He argued on Monday that it was “an extremely logical move” because the heat pump subsidies were “for people with money.”

“They are middle-class subsidies,” said Mr Vince. “It’s another case where if you’ve got money, the Government will give you money.

“So I’m really pleased to see them take back some of this heat pump money and use it for defence, which is clearly more important in a lot of people’s eyes.”

A spokesman for DESNZ said: “Savings for the Defence Investment Plan are a small part of DESNZ’s overall budget, which saw a significant uplift at the spending review.

“We will set out how we will fund essential investment in our national security this autumn.”

Join the conversation

Show 566 comments

The Telegraph values your comments but kindly requests all posts are on topic, constructive and respectful. Please review our commenting policy.

Copy link

The Telegraph values your comments but kindly requests all posts are on topic, constructive and respectful. Please review our commenting policy.

Heat pump subsidies to be scaled back to fund defence

Headline goes beyond the article

How other outlets reported it

More from The Telegraph