The UK government is preparing to cut hundreds of millions of pounds from the Boiler Upgrade Scheme — the £2.7bn programme that provides grants of up to £9,000 for households replacing gas boilers with electric heat pumps — to help fund a £15bn increase in defence spending over four years. Energy Secretary Miatta Fahnbulleh has been tasked with finding more than £2bn in savings from her department's budget under a plan originally drawn up by the previous government and agreed to by former energy secretary Ed Miliband. The scheme, launched in 2022, has subsidised nearly 80,000 heat pump installations. The basic grant of £7,500 covers just over half the median cost, which Treasury officials have long used to frame it as a middle-class subsidy. Supporters counter that more than 40% of grants went to households earning below £52,000 annually, and that the scheme's real value lies in building an industry now growing at over 25% a year. Greg Jackson, CEO of Octopus Energy, says heat pumps can now cost the same as a gas boiler after the grant, and that more than 500,000 customers have requested quotes in the last 18 months. The cuts extend beyond heat pumps. Bloomberg reported this month that ministers are also planning to reduce spending on carbon capture and storage (CCS) and green hydrogen schemes. The government had earmarked £21.7bn for CCS through 2050. Energy minister Martin McCluskey acknowledged publicly that "difficult decisions" are being forced by the defence investment plan. Ministers are also expected to greenlight the Jackdaw gasfield as soon as this week. The structural problem is straightforward: capital budgets built to decarbonise heating are being raided to fund military spending, with no replacement mechanism. The energy department's capital budget is described as one of the fastest growing in Whitehall, and officials insist the defence-related cuts are a small share of the overall envelope. But the heat pump industry was built on the explicit promise of sustained subsidy through its scaling phase. France sold four times the UK's heat pump volume last year; the UK gap will widen if installer confidence collapses. Nesta's Madeleine Gabriel called it "a kick in the teeth for the businesses and tradespeople who've put in time and money to build the industry." The concern is not that a mature technology loses training wheels — it's that an immature one loses them mid-flight. Dale Vince, energy entrepreneur and Labour donor, adds a complicating note: "Electrifying heat without fixing electricity pricing risks shifting higher costs on to households rather than delivering savings." The defence uplift itself is under pressure. Former defence secretary John Healey resigned in June arguing the spending increase was insufficient; Chancellor Healey now must find an additional £4.7bn in savings over four years beyond what departments already agreed. The energy department is absorbing fiscal stress generated by geopolitical competition, and the cost falls on the clean-heat transition. What makes this extractive rather than merely painful is the sequence: government creates a market, industry invests on that signal, government withdraws the signal to fund an unrelated priority, and the sunk private investment is stranded. The public bears the cost twice — once through higher long-term energy bills tied to gas dependence, and again through the defence spending the cuts are meant to fund.
