Heat Pump Association UK, Chief Executive, Charlotte Lee, said: “The Boiler Upgrade Scheme plays a vital role in supporting households and small businesses to adopt heat pumps. Many who rely on heating oil have faced significant price uncertainty in recent months and lack the protection of the energy price cap.

“The £1,500 uplift for oil users will make the transition to heat pumps more affordable, helping to shield families and small businesses from volatile fossil fuel costs in the years ahead.

Paul Rose, chief executive of OFTEC, and Ken Cronin, chief executive, UKIFDA, commented: 'We welcome the government’s recognition that off-grid households using heating oil face unique challenges and higher costs to transition to heat pumps. Increasing the Boiler Upgrade Scheme grant to £9,000 is a positive step.

“However, the fact remains that, even with this additional funding, oil heated households still face a significant financial shortfall. The government’s own estimates put the switching cost at nearly £20,000. Most oil heated households simply do not have the disposable income available. Unfortunately, it will therefore often be wealthier households who will most benefit from this increase in grant funding.

“That’s not to say these households should remain on kerosene. Far from it, we want the government to support a wider range of low carbon technologies to ensure households have a choice that suits their current circumstances. Importantly, we need options that do not include the high upfront costs associated with heat pumps.

“Renewable liquid fuels, such as Hydrotreated Vegetable Oil (HVO), therefore need to be part of the mix. There is a clear public appetite for this approach, demonstrated by 16,000 oil heated households responding to the government’s recent consultation in support of these fuels. We now need to see a formal government response which incorporates these fuels into the wider decarbonisation strategy.

“These decisions matter. Building Regulations in England prohibit installing a heating appliance with the potential to produce more CO2 than the appliance being replaced. What this means is that if, for any reason, a heat pump turns out not to be suitable, households will not have an option to return to an oil boiler. When households are trying to play their part in cutting their carbon emissions, we must ensure any changes they make to their home heating leads to a positive outcome.”

Martyn Bridges, director of external affairs at Worcester Bosch said: “We believe this is really good for a number of oil and LPG users in the UK.

“There are a few reasons why we’ve seen this announcement today. First, it is driven by the volatility of oil prices since the crisis in the Middle East, which has seen domestic heating oil prices double.

“Secondly, it is also likely down to the estimated underspend (as of 31 March) of the Boiler Upgrade Scheme (BUS) of around £65m, which signals that growth in retrofit heat pumps is starting to flatline and further action is required to make this government policy look like it's succeeding.

“While finance is a big motivator, I think it’s not the only factor in people’s reluctance to change from a boiler system to a heat pump system. There are many thousands of homes with an externally sited oil-fired combination boiler, and whilst a heat pump sits outside the property, the required hot water storage cylinder is mostly installed inside, where space is precious - meaning it's not a good fit for households that simply don't have the internal room to spare.