The row between the government and major boiler manufacturers is heating up as Energy Secretary Claire Coutinho has accused the companies of ripping off consumers by imposing price rises in response to the Clean Heat Market Mechanism (CHMM) which is set to be introduced next year. The CHMM is designed to encourage manufacturers to sell a certain amount of heat pumps or face significant fines, but speaking on LBC Radio the Minister insisted that there was no reason why firms should be putting up their prices.
Ms Coutinho (pictured) told LBC: “I think this is price gouging plain and simple. What we have at the moment we have a policy in place where they have to sell 4% of their boilers as heat pumps. Industry estimates that the market overall, are selling 4% at the moment. We think it’s extremely unlikely that anyone will be fined. They say they are going to put £125 on boilers because they are expecting to face the full fine.
“I do think it’s something I’m going to look at very carefully. And I will talk to anyone who I believe is passing on unfair costs to the consumer. I’ll be speaking to them to make my views clear and monitoring the situation very carefully. It’s really important that where they are taking forward unfair practises, we call them out and make sure they are doing the right thing when it comes to customers.”
Worcester Bosch, Vaillant, and Baxi have all announced that they would be introducing a new levy on consumers buying oil and gas boilers for their homes from 1 January, arguing the price increase is needed to cover the costs of the CHMM regime that is due to come into force for the next financial year. Worcester Bosch has argued that the targets that have been set are clearly unachievable within the timescales allowed and it is therefore inevitable that manufacturers will be fined heavily which puts many of them into either a non-profit situation or even loss making situation as soon as years one or two of the scheme.
In an interview with Sky News, Worcester Bosch CEO Carl Arntzen, said: “We’re applying this levy outside of any VAT or tax implications, so this is purely an additional cost on the boiler, that we will not make profit from. We are purely and simply using that levy to pay the fine we believe we will have to pay next year.
“For the whole industry, it is a huge threat to our existence moving forward. We accept we have a responsibility to grow the market for heat pumps, equally the government has a responsibility to assist in growing that market.”
