Unspent boiler upgrade money will be lost, minister admits

The energy minister has admitted that underspends on the £150 million budget this year for the Boiler Upgrade Scheme (BUS) will be lost and cannot be carried over.

The latest figures from Ofgem show the total value of BUS vouchers issued by the end of January was just under £50 million – with just two months remaining for the first phase of the initiative.

Alex Stafford, Conservative MP for the Rother Valley, submitted a written question to the Department for Business, Energy & Industrial Strategy (BEIS) about whether any of the sum earmarked for the scheme in this financial year can be carried over.

Under the scheme, which is set to run from 2022 to 2025, households can access £5,000 grants to help cover the cost of replacing gas boilers with low-carbon alternatives, principally heat pumps.

In mid-December, junior energy minister Lord Callanan admitted in a select committee hearing that just £40 million worth of BUS vouchers had been issued by November, the midway point of the scheme’s operating year.

Figures released by the energy regulator this month show the figure had inched up to £49.7 million by the end of January, with a total of 9,889 vouchers issued. The number of vouchers redeemed stood at 7,641 with £38.3 million of grants paid out in total

In his response to Stafford’s question, energy and net zero minister of state Graham Stuart replied that the government does not expect the £150 million budget for year one of the scheme to be “fully utilised based on latest forecasts”.

“We have explored options to carry over unused budget from year 1 of the scheme but due to the accounting rules for capital spending schemes we do not expect this to be possible.”

Stuart’s response is in line with Treasury rules that stipulate departmental budget overspends cannot be carried over from one year to the next.

However the BUS has been plagued by setting up problems, principally the delayed launch of the full online portal for submitting applications , which only went live at the end of November.

Mike Foster, chief executive of the Energy and Utilities Alliance, the trade body for boiler manufacturers and gas companies, said: “The Boiler Upgrade Scheme is failing. The latest figures suggest that at best only 40% of the cash allocated to the scheme will be spent. The rest goes back to the Treasury. The scheme is flawed, rewarding those with large sums of cash at their disposal with a £5,000 bung at a time when millions of households simply can’t afford to heat their homes and they face bills rising a further 20% in April.

“The BUS should be scrapped and the cash allocated to invest in energy efficiency such as loft insulation, helping the least well off afford to keep warm. It is obscene to use taxpayers’ money to subsidise a purchase of a heat pump for people who would probably have bought one anyway.”