Households Could Be Given Interest Free Loans To Buy Solar Panels And Heat Pumps
3 min read
The government is looking at offering households interest-free loans to install solar panels and heat pumps as part of its green energy strategy, PoliticsHome understands.
The Warm Homes Plan, originally scheduled for publication late last year, is expected to be released this month, potentially as soon as next week, as part of the government's effort to make households more energy-efficient and reduce their bills.
The strategy will set out £15bn worth of measures designed to encourage people to switch to greener energy sources, and, according to the Labour government, will help lift over one million households out of fuel poverty by 2023.
As part of the plan, Ed Miliband's Department for Energy Security and Net Zero (DESNZ) is considering around £2bn worth of loans, interest-free, for households to use to install solar panels, batteries and heat pumps, PoliticsHome understands. These loans would be spread over five to ten years, under one option being discussed.
The government has already confirmed ahead of the Warm Homes Plan that councils and social housing providers will be given up to £1.8bn to decarbonise social housing.
Ministers are also expected to keep long-term subsidies for heat pumps at their existing levels. The government currently offers households £7,500 grants towards heat pumps, with the aim of persuading millions of people to replace gas boilers with the greener, electric alternative.
The government told PoliticsHome it does not comment on leaks.
A DESNZ spokesperson added: “We are investing an additional £1.5bn into our Warm Homes Plan, taking it to nearly £15bn – the biggest ever public investment to upgrade homes and tackle fuel poverty ever.
"We are doubling down on support for home upgrades and will set out our plans to help households, and support thousands more clean energy jobs, soon.”
PoliticsHome understands there is a desire in government to move ahead with the Warm Homes Plan as quickly as possible, with the Prime Minister making tackling the cost-of-living key to his 2026 agenda and rebuilding Labour Party support.
Starmer this week told cabinet ministers to "keep a relentless focus on the cost of living" and argued that revivals by centre-left political parties elsewhere in the world have been sparked by driving down costs facing voters.
Ofgem recently confirmed that the energy price cap, which sets the maximum amount suppliers can charge households, would rise by 0.2 per cent from 1 January, meaning that the average household will pay £1,758 a year.
The heat pumps element of the government's green energy strategy risks controversy. The Times recently reported concern among some Labour MPs that a move to impose levies on gas boilers to subsidise heat pumps would disproportionately impact lower-income households, and fuel Reform UK criticism of the government's net zero agenda.
“The government is too focused on heat pumps… for many in the worst-performing houses, a heat pump isn’t the solution that dramatically changes bills," one anonymous Labour MP told the newspaper.
The Tony Blair Institute think tank (TBI), which has close links to the Keir Starmer Labour government, warned in October that the government's plan to achieve clean power by 2030 needed reform, arguing that earlier policies were "launched in the middle of the gas crisis and in a low-interest environment, it was right for its time, but circumstances have changed".
