Representatives of the UK heating industry have called on the government to scrap the Clean Heat Market Mechanism (CHMM) – which some have labelled a tax on boilers – in light of the Prime Minister’s pledge to tackle the cost of living crisis.

Heating trade body The Energy and Utilities Alliance (EUA) has written to Energy Secretary Ed Miliband urging him to take decisive action by ending the CHMM at the close of this financial year. The policy, introduced under Boris Johnson’s government, imposes fines on boiler manufacturers who fail to meet heat pump sales targets – a measure which it is argued has increased costs for consumers without boosting demand for heat pumps.

“Energy bills are central to how households feel about their finances, and while the Government’s £150 bill reduction is welcome, the cost of heating a home isn’t just about what flows through the meter—it includes appliance costs too,” says EUA CEO Mike Foster. “The CHMM adds £27 to the cost of replacing a boiler, rising to £36 if planned legislative changes go ahead. This is a needless burden on 1.5 million households every year.”

Foster argues that the policy has failed to stimulate heat pump uptake, leaving manufacturers with warehouses full of unsold stock while passing fines down the supply chain to consumers. “Scrapping the Boiler Tax would send a clear signal that the Government is serious about easing the cost of living,” he adds.

The EUA says it stands ready to work with ministers on alternative strategies to increase demand for low-carbon heating solutions without penalising consumers. Mike Foster’s letter to Ed Miliband is reproduced below:

Dear Ed

Cost of living impact of the Clean Heat Market Mechanism aka ‘The boiler tax’.

I am writing in response to the press coverage of this week’s meeting of the Cabinet, where the Prime Minister reportedly asked Cabinet colleagues to help bear down on the cost of living. You and I both know that energy bills are key to how consumers feel about their own financial situation, with any help being welcome. The budget announcement of £150 off the average bill is widely welcomed as was your clear statement to the House on Tuesday that you do not intend to increase levies on gas bills, contrary to the press speculation.

But you and I both also know that the cost of heating a home is not just the metered bill, it also includes appliance costs too. The Clean Heat Market Mechanism, a Boris Johnson policy, has artificially increased the cost of replacing a boiler by £27, rising to £36 extra if your planned legislative change goes ahead.

Here is an opportunity to show your total support for what the Prime Minister is trying to do. You could announce that given the change in priorities, identified by Keir and outlined in the Cabinet, you are scrapping the Clean Heat Market Mechanism from the end of this financial year. The policy doesn’t increased demand for heat pumps; manufacturers sit with warehouses full of kit, incurring costs, because of a lack of demand. Fining them because consumers choose alternatives is a ridiculous policy. Even the previous government have now come out against it. All the policy does is add to the cost of installing a boiler because British manufacturers have no alternative other than to pass the cost of the fines onto their customers, the builders merchants, who in turn pass the costs onto installer, finally hitting the consumer in the pocket. 1.5 million households each year are likely to be worse off as a result of the CHMM.

Given what the Prime Minister wants, now would be a perfect time to change course and scrap the Boiler Tax. In doing so, because of its high profile, you would very publicly demonstrate that the Prime Minister means what he says.

It goes without saying the UK heating industry would welcome the move; publicly support the policy change but importantly continue to work with you to find ways of increasing demand for a product that has plenty of supply but low demand.

I have also copied this to Martin McCluskey as the Minister with responsibility for home heating.

I look forward to hearing from you.

Best wishes

Mike Foster

CEO