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Industry reacts to Spring Statement

While support for energy efficient measures have been welcomed, other aspects of Chancellor Rishi Sunak's Spring Statement have been met with disappointment in some sectors of the industry.

Phil Hurley, chair of the Heat Pump Association (HPA) said: “The Spring Statement comes with great news for the heat pump industry and households today. The HPA has been working hard behind the scenes calling for financial incentives to tackle the barriers to heat pump uptake, and the decision to cut VAT from 5% to zero on energy-saving measures is an important step forward. Whilst this decision alone will not be enough to enable all households to access technologies such as heat pumps, we are confident that it will play a role in helping to accelerate the switch to low carbon heat. But we must remember that more steps still need to be taken to support the rollout of heat pumps, including the removal of illogical environmental levies on electricity.”

National Insulation Association (NIA) chair, Derek Horrocks said: “Insulating homes is essential to the success of the Government’s plans to reduce carbon emissions in line with climate objectives, but we know that measures are not being installed on the scale required to reduce energy demand in homes and tackle the cost-of-living crisis. The VAT cut on energy efficiency introduced by the Chancellor today could make a strong contribution to tackling the cost barrier to energy efficiency improvements in the UK, but the NIA welcomes the decision with caution that other financial support will be needed for homes where this incentive is not the right solution. Taking a whole-house fabric first approach will help to ensure that homes are fit for low carbon solutions be it immediately or some years later so it is great that the VAT cut will apply to an array of solutions.”

Henk van den Berg, strategic business manager, heating & renewables Daikin UK, said: “Given the current pressures being felt by households across the country it was inevitable – and right – that the Chancellor focused his statement on measures to help alleviate the cost-of-living crisis.

“Removing VAT from heat pumps and other green measures is a positive step as it will make it easier for households who want to be more energy efficient. This move will also give the green light to many households contemplating a heat pump under this year’s Boiler Upgrade Scheme.

“However, eliminating the additional levy on electricity pricing, which was indicated in last year’s Heat & Building Strategy, has still not been addressed. This will need to be part of Government policy sooner rather than later.

“In relation to the current cost-of-living crisis, we don’t think it needs to be an either/or situation when it comes to offering ways to help make homes more energy efficient and greener. There is a danger of a narrative taking hold that we can’t decarbonise while helping people with the cost of living at the same time. This simply isn’t true.

“We will continue making the case for these measures to play our part in decarbonising the UK’s homes.”

Carl Arntzen, chief executive of Worcester Bosch said: “We welcome the Chancellor’s removal of VAT on heat pumps, solar panels and other energy-efficiency measures. We feel that this will support the needed transition of UK homes towards a net zero future.

“One of the main barriers for consumers looking to install greener heating technology at home is the cost, so the savings this tax relief could bring may help counteract this, whilst contributing to an increased uptake of these types of measures.

“As the more specific details start to appear following today’s initial Spring Statement, it will be interesting to see whether the 5% tax relief is for the products and materials, or, as we would hope, applies to the total cost of installation, as around 60% of the cost of a heat pump installation is on ancillaries and labour.”

Meanwhile Mike Foster, chief executive of the Energy and Utilities Alliance (EUA), was much more disappointed. He said: “The Chancellor has clearly not heard the outcry over rocketing energy bills faced by millions. He has done nothing in the Spring Statement to help the vast majority of consumers who face bills doubling this year.”

“His VAT cut on solar panels and heat pumps will be welcomed by those who make them and by those who can afford to fit them, but a VAT cut on energy bills would have helped everyone.”

“Frankly, consumers waiting to hear good news on their energy bills will be left asking, ‘is that it Chancellor?’”

24 March 2022

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