The Government’s flagship heat pump policy is failing on its own terms – driving up household costs while doing nothing to increase heat pump installations, according to new analysis of official installation data.

The Clean Heat Market Mechanism (CHMM) which created the ‘boiler tax’ which came into force in April 2025, was designed to force boiler manufacturers to sell more heat pumps or pay fines.  Those fines are being passed directly onto households as a “boiler tax”, adding to the cost of replacing boilers during an already acute cost-of-living crisis.

Yet the data show heat pump installations have fallen, not risen since the policy began.

Heat pump installations falling despite higher penalties

Government‑recognised MCS installation data show that heat pump installations are higher in the year April 2024-March 2025, than under the CHMM April 2025-March 2026.

Commenting on the findings, Mike Foster CEDO of EUA said: “Instead of stimulating demand, the CHMM has delivered higher costs with declining installations – the opposite of what Ministers promised.  A tax on boilers that does not deliver heat pumps.”

The CHMM operates by penalising manufacturers that miss government‑set heat pump targets, fines which are spread across all boiler sales.  This has translated into a boiler tax of around £27 per unit from April 2025, rising to £36 per boiler this year as government targets were increased despite the evidence of falling heat pump installations.

Around 1.5 million households replace their boiler annually, meaning the policy is now extracting tens of millions of pounds from families, even though most will never install a heat pump.

Mr Foster added: “This is not a failure of supply.  Industry has repeatedly warned that the real barrier is demand, driven by cost, disruption and suitability of homes, warnings that Whitehall has chosen to ignore.”

Heat pumps still financially irrational for most households

The policy failure is rooted in economics the Government refuses to confront.  According to MCS data:

  • Average heat pump installation cost (2026 YTD): £13,700
  • Typical gas boiler replacement: ~£2,500
  • The government grant (BUS) is worth £7,500, leaving £6,200 to be found by the householder.

Mr Foster said: “Even after the full subsidy, households still face thousands of pounds in additional costs, alongside disruption and energy bill uncertainty.  It is therefore no surprise that forcing manufacturers to sell heat pumps does not force households to buy them.

“Despite missing its own heat pump sales targets in 2025–26, the Government has responded not by fixing the policy, but by raising targets again for 2026–27, automatically increasing penalties and the boiler tax yet further.

“This approach punishes consumers for government failure, while doing nothing to address the structural weaknesses in the heat pump market.  The CHMM should be scrapped.  The evidence is now clear: MCS heat pump installations are falling, not rising; boiler costs are increasing for all households thanks to the boiler tax; the policy ignores consumer economics;  the cost‑of‑living crisis is being made worse;  the policy is not delivering heat pump deployment.

“The Clean Heat Market Mechanism is economically illiterate, socially unfair and politically reckless.  If the Government is serious about decarbonising heat, it must scrap the CHMM immediately and replace it with policies that tackle upfront and running costs honestly; focus on demand‑side reality, not Whitehall targets and stop penalising ordinary families for policy failure.  Doubling down on a failed policy will not deliver net zero, it will only deepen public resistance and erode trust.”