Ross Clark

This heat pump scheme is a bung to the rich

This heat pump scheme is a bung to the rich
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Who does the government think will be the 90,000 lucky people who succeed in pocketing £5,000 grants to replace their gas boilers with heat pumps? Just-about-managing homeowners in ‘Red Wall’ seats who strained every sinew to buy a draughty two up, two down – or well-off homeowners with nice period houses, lots of capital and three cars on the drive?

Here’s a little clue: even taking into account the £5,000 grant it will still cost upwards of £5,000 to install the heat pump itself, plus another £10,000 for insulation and to install larger radiators – so it is really not an option for the first group. As for the second, they are bound to lap up those grants, just as they have every other environmental handout on offer.

It is always the same with green grants. Bungs to install photovoltaic panels introduced over a decade ago went to homeowners with £10,000 to invest. Thanks to the inflated prices which power providers are obliged to pay for the electricity generated by early adopters, those PV panels have become assets now paying risk-free returns of upwards of 10 per cent a year, index-linked to the Retail Prices Index.

It was the same with huge subsidies paid to homeowners to install biomass boilers – pieces of kit which are only suitable for large properties. And it happened, too, with grants for electric vehicles, which have been eagerly taken up by eco-conscious, well-off motorists who wanted to treat themselves to a second or third car. This is not to mention the fortunes which have been made by landowners with the space to install wind farms and solar farms.

But guess who pays? Most of these bungs are added to the utility bills of people who can’t afford to generate their own electricity – according to Ofgem, 25 per cent of our electricity bills are currently accounted for by environmental and social levies. It would be a little fairer if the costs were met out of general taxation, which tends to be progressive, but most come in the form of regressive taxes. With electric vehicles, the situation is even less fair: while buyers of new electric cars enjoy grants of £3,500, owners of older vehicles are now being singled out for stiff daily charges in low emissions zones.

Green incentives have long been a racket, a machine designed to transfer wealth from the poor to the rich. Normally, there would be outrage at such a system. But when it comes to anything green, the usual rules seem to go out of the window. Indeed, many on the left, who you might think would be especially offended at the inverse redistribution of wealth, spend time demanding even more green levies and subsidies. Don’t expect much in the way of objection from Labour against the heat pump grants – only a mild complaint that new gas boilers won’t be banned at an earlier date.