HM Treasury’s 2026 Budget sets funding for the Boiler Upgrade Scheme at £400 million in 2027-28, down from £600 million in the previous plan, as the government pursues a 2030 heat-pump target.
The scheme provides grants to households and small businesses replacing fossil-fuel heating with heat pumps. The government’s Warm Homes Plan aims to enable more than 450,000 heat-pump installations each year by 2030. Its earlier funding schedule listed £683 million for 2028-29 and £709 million for 2029-30. Treasury says funding should rise roughly in line with inflation after 2027-28, but the Budget gives no revised annual amounts for those later years.
LCP Delta says the number of installations supported by the scheme could remain relatively flat and fall short of government targets without further action. That is the firm’s assessment, not an official forecast. The Budget does not provide a new annual projection for installations. Thomas Barquin, senior consultant and heat team lead at LCP Delta, said scheme-backed installations could “remain relatively flat” without additional action.
The Department for Energy Security and Net Zero (DESNZ) will redirect resources toward the Defence Investment Plan, according to Treasury. The listed savings are £1 billion from Warm Homes Plan capital grants, £500 million from hydrogen and £200 million related to carbon capture, usage and storage (CCUS). The Budget identifies savings in those programs but does not describe the figures as DESNZ’s total reductions.
A separate 1% reduction in departmental capital budgets across government is expected to raise £3 billion from 2027-28 through 2029-30. Treasury also plans to draw £1.7 billion from its capital reserve. Together, those measures make up a broader £4.7 billion defense funding package. The £3 billion reduction applies across departments, not to DESNZ alone.
The government says most Warm Homes Plan funding for low-income households and social housing remains protected. It has also launched the Warm Homes Loan Scheme to support heat pumps and other clean technologies. Chancellor John Healey said in his Oct. 28 Budget speech, “Today I’m setting a new course on energy: to get UK energy costs down in line with Europe.” The government’s next spending plans are due in a 2027 spending review.
