The House of Lords Environment and Climate Change Committee published the findings of its inquiry into the Boiler Upgrade Scheme in February 2023, concluding that the low level of grant funding was one of the main factors holding back the uptake of heat pumps through the scheme1. The committee recommended raising the grant level to address low uptake1.
At the time of the inquiry, the scheme offered £5,000 for an air source heat pump. On average, that grant represented approximately half of the installation cost, leaving households to meet substantial remaining costs, which deterred many from applying1. The National Insulation Association, in a later response to a government consultation on amending the scheme regulations, stated that the main issue preventing uptake via the Boiler Upgrade Scheme was the level of grant funding being offered, and that this had been the main barrier to the scheme's success rather than minimum insulation requirements on Energy Performance Certificates1.
"The findings of the Lords Environment and Climate Change Committee's inquiry into BUS, published in February 2023, found that the low level of grant funding was one of the main factors holding back the uptake of heat pumps via the scheme."
The government subsequently announced that the grant funding level would rise to £7,500 from 23 October 20231. The association described this as the Prime Minister's announcement and said the committee's recommendation to raise the grant level had thereby been implemented, a move it said had been welcomed across the home decarbonisation industry1.
The association also argued that the requirement for a valid EPC with no outstanding recommendations for loft or cavity wall insulation should be maintained, saying that removing it would risk higher running costs and worse outcomes for consumers1. It cited the energy price cap, under which the unit price for electricity was almost four times higher than that for gas, and Energy Saving Trust figures that a home with an uninsulated loft and cavity walls could be losing over half of its heat through those two building elements1. It said a fabric-first approach, with insulation installed before or alongside a heat pump, allows a smaller and cheaper heat pump to be fitted that then runs at higher efficiency1.
The government has set targets to install 600,000 heat pumps per year by 2028, rising to 1.9 million per year by 20351.
Why it matters for households
The committee's finding goes to the size of the remaining bill rather than the principle of the grant. If a £5,000 grant covered only about half of an air source heat pump installation, a household still had to find the other half, and that gap was identified as the reason many did not apply1. Raising the grant to £7,500 narrows that gap, though the sources do not state what share of installation cost the higher figure represents.
For a home's energy independence, the insulation conditions attached to the grant matter as much as the money. The association's position is that a heat pump in a poorly insulated property risks expensive running costs, because heat pumps work best in thermally efficient homes, and that electricity priced at almost four times the unit rate of gas makes that risk sharper1. It also warns that fitting a heat pump first and insulating later can leave a system oversized for the property's reduced heating demand, with unnecessarily high capital and running costs1. Households weighing a heat pump against other options can compare routes on our pages covering Boiler Upgrade Scheme or ECO4 and the cost of a heat pump with a BUS grant.
What happens next
The grant increase to £7,500 took effect from 23 October 20231. The consultation on proposed amendments to the Boiler Upgrade Scheme Regulations, to which the association's response was submitted, closed on 12 October 20231. The sources do not report the government's decision on the EPC insulation requirements, or whether the higher grant has changed uptake.