The Energy Secretary has called for a review of the home heating appliance market following “unjustified price hikes” for gas boilers by some manufacturers with “considerable market power”.
Claire Coutinho, Secretary of State for Energy Security and Net Zero explained that four boiler manufacturers dominate 90% of the market. However, the Government is concerned that recent pricing decisions “have called into question whether the home heating industry is working as well as it should and delivering the best outcome for consumers”.
YourMoney.com understands that the four major manufacturers include Baxi, Ideal, Vaillant and Worcester Bosch.
In a written statement, Coutinho wrote: “We are calling for the Competition and Markets Authority to conduct a review of the home heating appliance market to understand whether any weakness in competition is contributing to prices being higher than they would be in a well-functioning market.”
The ‘boiler tax’
This is all to do with the move towards cleaner, greener home heating systems and a step back from gas boilers and fossil fuels.
As part of the Government’s Clean Heat Market Mechanism (CHMM) to support the transition to low-carbon heating – originally due to be rolled out from April 2024 – it aimed for 600,000 heat pump installations per year by 2028.
Manufacturers would need to meet targets or face fines. And in a bid to offset any potential fines from missing targets, a number of manufacturers confirmed in the New Year that they would be raising prices across their ranges – upwards of £100.
However, Coutinho confirmed that the Government has scrapped the implementation of the CHMM until April 2025, adjusting the launch from 1 April 2024 to 1 April 2025.
She added that in doing so, the target levels for 2025/26 (set at 6% of relevant boiler sales), and other aspects of the scheme’s design and implementation, “would remain as set out in the Government’s November 2023 consultation response”.
Boiler Upgrade Scheme
As well as issuing the Government’s intentions to look into the heating appliance market, the MP also provided an update on the BUS.
The initiative offers households £7,500 (up from £6,000 previously) towards the cost of a new heat pump – a more energy-efficient way of heating your home.
It said uptake on the scheme has skyrocketed, with October, November and December proving to be the most popular months since the scheme was introduced. December applications were up by 49% on December 2022’s numbers.
Up until the end of January 2024, 33,424 applications were made to the scheme, and it has paid out 20,497 vouchers to properties totalling over £113 million.
Coutinho added that to “broaden the pool of properties eligible for the scheme” it will remove the requirement for a property to have loft and cavity wall insulation, “although Government guidance remains that properties should be appropriately insulated”.
She noted: “This will address concerns about forcing hard-pressed families to carry out insulation upgrades to be eligible for the scheme by instead empowering them to decide what is right for them”.
YourMoney.com contacted Baxi, Ideal, Vaillant and Worcester Bosch for a comment. Worcester said it is not providing a comment at this time while the other three failed to respond by the time of publication.
