Heat pump uptake could be boosted with stamp duty rebate, report finds

Image credit: DT

The government should give UK stamp duty rebates of up to 50 per cent for those installing heat pumps and other energy-efficiency measures, the centre-right think tank Onward has said.

In its ‘Going Green’ report, Onward said the UK will not reach net zero by 2050 unless people rapidly adopt new technologies and change their behaviours.

In February, research from Wunderflats ranked the UK near the bottom of 28 European nations for having the coldest, oldest and leakiest housing stock.

To accelerate energy efficiency installations, Onward suggested that any homeowner who installs a heat pump within 24 months of moving in should get a stamp duty rebate.

The report found that individuals “going green” will be responsible for one-third of the changes that need to be made if the UK is to reach net zero by 2050.

Of the three biggest changes needed to reach net zero – decarbonisation of the electricity supply; uptake of electric vehicles (EVs), and adoption of low-carbon heating systems – individuals will be responsible for uptake of the latter two.

The research found that the public remain concerned about the personal costs involved and are sceptical about the performance of green technologies.

The UK needs to retrofit around two houses per minute between now and 2035 to meet the government’s targets on energy efficiency.

Onward urged the government to learn from the failure of previous initiatives such as the Tory/Lib-Dem coalition government’s ‘Green Deal’ for retrofit which saw only 15,000 households signed up out of 610,000 assessments before the scheme was scrapped in 2015 – a conversion rate of just 2.5 per cent.

The current government’s £2bn ‘Green Homes Grant’ programme was intended to retrofit 600,000 homes, but as of February 2022 had only benefited 43,000. MPs on the Public Accounts Committee found that the scheme “underperformed badly” prior to its swift closure in March 2021.

There is some evidence that programmes like the ‘Plug-In Car Grant’ which provides funds for new electric and hybrid vehicles have accelerated uptake, but concerns about the availability of public charge points remain.

In June, the Department for Transport announced the closure of the scheme, claiming that a “mature market” for electric vehicles had already been created. The decision drew flak from the UK’s domestic car industry.

“Ministers must therefore give careful consideration to how best to encourage individuals to make the necessary changes,” Onward said. “In this report, we propose that ministers should explore the potential for interventions which harness the way people behave and interact with each other, including ‘collective incentives’ and ‘nudges’”.

Other suggestions in the report include the creation of aggregation schemes for Local or Combined Authorities, which use collective purchasing power to negotiate lower prices for new technologies for groups of buyers; a salary sacrifice scheme for green technologies, promoted through workplaces, and a consultation on introducing a mandatory requirement for carbon labelling on food and beverage products.

Dame Caroline Spelman, co-chair of the ‘Getting to Zero’ commission, said: “As a former Environment Secretary, Liz Truss ought to know the devastating consequences of failing to reach net zero. Similarly, Rishi Sunak’s time as Chancellor will have warned him of an even bigger bill to the Treasury if we fail to act in a timely fashion.

“Whoever becomes Prime Minister should take note of the bold recommendations put forward by Onward to make it easier for the public to make the choices required for net zero”

Rt Hon Caroline Flint, co-chair of the Getting to Zero commission, said: “As Onward’s new research shows, people have a crucial role to play in reaching net zero through the adoption of clean and green technologies and behaviours. But many people are naturally concerned about the upfront costs of doing so.

“This new report sets how the government can learn from the failures of previous schemes and help people to ‘go green’ in an affordable manner.”

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