It is a pleasure to serve under your chairmanship yet again, Mr Vickers.
The clean heat market mechanism imposes Government targets on the manufacturers of gas boilers. It tells them that they have to sell a certain amount of heat pumps each year and imposes fines for every gas boiler they sell above their quota. Inevitably, the fines will be passed on to the consumer. Far from having consumers in their mind’s eye, the Government have already shown flagrant disregard for consumers in a host of areas: including their grocery tax, which will cost families £56 a year; their family holiday tax, which will cost up to £300 a year; their eye-wateringly expensive energy policies; and their misguided national insurance hike, which the Bank of England warns will raise prices and lower wages—a double whammy hitting people’s pockets.
Now they are asking us to support the Secretary of State for Energy Security and Net Zero, who clearly has no interest in the cost of living in this country, having unfettered power to interfere with the price of people’s boilers. Last year, when we were in government, the then Secretary of State was clear that we would not introduce a policy that punishes people who choose not to install a heat pump. The current Secretary of State has an ideological obsession with going further and faster than any other country. Handing him the powers to push up the cost of installing new gas boilers in this country is a recipe for piling extra costs on to consumers. Because people usually have to replace their boilers at short notice, that will come at a time when families are least expecting it and can probably least afford it. The British people will once again be forced to pick up the bill for this Government’s ideological approach to net zero.
Around 1% of people in this country have a heat pump. Many who have chosen to install them are happy with them. If people want to spend their money to electrify their heating, it is not the Government’s job to prevent them from doing so, but the Government should not punish people if they do not want, or cannot afford, to make that switch.
We were happy to give families a helping hand, which is why we increased the grant available through the boiler upgrade scheme by 50% to £7,500, making it one of the most generous schemes in Europe. Applications actually increased by 75% as a result. It is simply not sustainable, however, to impose ever larger taxes to force consumers to switch to technologies if they do not want to do so.
That is even more dangerous given that the Labour party’s plans will make electricity much more expensive and, therefore, electrified heating much less desirable. The Electrification of Heat demonstration project report, published last month, found that the average installed cost of a high-temperature heat pump was more than £17,000. Even with the £7,500 Government grant, that means the cost of installing a heat pump is about three times that of installing a new gas boiler. That is before considering the extra hidden costs that go along with heat pumps, such as more insulation, replacing radiators, underfloor heating and more. Furthermore, let us not forget that many properties are not, and never will be, right for a heat pump. The same report found that even 34% of homes recommended for heat pumps as part of the trial were found, in the end, not to be suitable.
If the cost of gas boilers is pushed up, those families who have no choice or who live in unsuitable homes such as older properties or blocks of flats will face an unavoidable and unjustified price hike. In government, we exempted households who were not suitable for heat pumps from ever having to rip out their gas boiler. If the briefings to the newspaper are correct, of course, we welcome the Secretary State’s decision to scrap the 2035 boiler ban, but it is plain to see that the Government are simply replacing a boiler ban with a boiler tax. This draft SI will give the Secretary of State the power to increase the cost of new gas boilers, making things harder for people, even those whose homes cannot be made suitable without extra work costing tens of thousands of pounds.
During the election campaign, the Minister and her colleagues promised the British people £300 off their energy bills, a promise that we hear no Labour MP repeating at the moment. As soon as they got into Government, they snatched the winter fuel payment away from millions of pensioners in poverty, taxed family farmers and taxed the North sea oil and gas sector. Now, they are taxing people’s boilers, too. The evidence is increasingly clear that the Government’s rush to decarbonise the electricity grid by 2030 will increase the cost of electricity in this country, so that all those who have been told to move over to heat pumps—in fact, all our constituents—will face higher electricity bills as a result.
Last week, the Secretary of State said that we will only tackle climate change by working with other countries. But there is no sense in making our own people poorer and enforcing hardship on them in the name of reaching net zero, because no other country will want to follow our lead. Only by increasing prosperity and living standards will we convince the world’s largest polluters to cut their emissions. Once Ministers have snuck this power on to the statute book, they will be free to ramp up the fines dramatically in the years ahead in order to meet the Secretary of State’s targets. In fact, if they are to meet their legally binding climate targets, they will have no choice but to ratchet up the fines and to inflict more hardship on the British people.
Ministers should ask people why they do not want heat pumps, not force people to have one by making gas boilers increasingly unaffordable. The Conservatives believe that consumers get the best products when they drive the market through choice. As the Secretary of State has said, an overly centralised approach to net zero targets will slow down the take-up of new technology, requiring ever larger subsidies and ever stricter punishments to force consumers to buy the products that Ministers in Whitehall have decided are right for them.
That is why we have said that the carbon budget system needs a rethink. It is sending us down an increasingly prescriptive path, where Government tell businesses that they must sell a certain amount of a certain product by a certain date. It is central planning by the back door, and it is leading to perverse incentives, where Ministers are presented with endless submissions that say, “We must implement this policy”, not because it lowers costs for consumers or businesses, but because it will help us to meet our carbon budgets. That is wrong. I am afraid it is why Ministers are before us today to push through a policy that they know will make life harder and more expensive for people across this country.
When we were in government, we pushed back on that policy because we were not willing to pile extra costs on consumers to force them to adapt to and adopt technologies that they did not want. We said that free markets were a much better route to cheaper products and better technology, which actually improve people’s lives. If the Government want households to install heat pumps, they should let the manufacturers make the case to their consumers to convince them that they are worth while and that the power of the market brings prices down naturally without endless Government intervention. In this area more than any other, we need to put living standards before ideology, but I am afraid that with this Government, whether it is their family farm tax, their rush to shut down the North sea or their attack on educational standards, ideology seems always to come first. That is why we cannot support the introduction of the boiler tax.