(pictured is Malcolm Farrow, Director of Marketing and External Affairs at OFTEC, whose comments are below)
The Chancellor, Rachel Reeves, delivered the 2025 Budget on 26th November. One move was the announcement of the withdrawal of ECO (Energy Company Obligation), a measure designed to provide financial assistance for the provision of home energy efficiency upgrades, such as insulation or heating upgrades.
ECO funding is drawn for levies on energy bills, now due to be removed from 1st April 2026.
Russell Dean, Residential Product Group Director at Mitsubishi Electric, said:
“The removal of costly levies on electricity bills – something we’ve long advocated for – is a promising step to boost heat pump adoption rates. We further welcome the government’s commitment in the Budget to “improve the price of electricity relative to gas” – although the best way to expedite this would be to decouple the cost of electricity from gas.”
Hamid Salimi, Residential Product Manager, Daikin UK said:
“Daikin welcomes the government’s plan to reduce energy bills by an average of £150. Bringing down the cost of electricity will undoubtedly ease the cost-of-living crisis. This will make low-carbon heating and cooling more affordable and encourage households and businesses to make the switch.”
Jeff House, Director of External Affairs and Policy at Baxi, said:
“The ending of the Energy Company Obligation (ECO) is a disappointing move as it currently represents a significant proportion of the annual heat pump market.
“We acknowledge that there will be additional funding deployed through the Warm Homes Plan to address fuel-poor housing. But £1.5 billion over three years is a reduction compared to ECO’s £1.7 billion a year.
“We await with interest the Warm Homes Plan which we hope offers further clarity.”
Martyn Bridges, Director of External Affairs at Worcester Bosch, said:
“ECO 4 started on the 1st April 2022 and continues until 31st March 2026. In that time, it has fully funded just under 39,000 Heatpumps up until the end of September 2025, an average of around 1,000 appliances a month. In today’s budget, the chancellor announced that ECO will not continue after the 1st April 2026, saving households around £150 annually on their energy bills.
“As these appliances were all eligible to be counted towards the target quota that manufacturers have to meet to avoid fines under the Clean Heat Market Mechanism (CHMM), then the CHMM targets need re-appraising. Removing on average 12,000 funded heat pumps from the market would potentially result in fines in excess of £6m for manufacturers as they cannot meet their quotas.”
Sachin Vibhute, Technical Consultant and Product Training Manager at LG said:
“The budget’s focus on reducing energy bill with the warm home discount will help families in the short term. But, for notable change we need to continue the focus on driving heat pump uptake, which has accelerated rapidly over the last 12 months.
“The budget was light on tangible solutions that will help heat pump installations to scale. Continued investment in schemes such as the Boiler Upgrade Scheme is one thing. But we need clearer consumer guidance, and long-term policy. Without regulatory mandates to install green technologies, we risk the loss of long-term momentum.”
“Manufactures are already playing their part in driving long term momentum, helping to train a skilled workforce prepared to meet the evolving demands of HVAC installation and maintenance. To help carry this forward, I’m glad to see the government fully fund apprenticeships for under 25s in small and medium businesses. Here, installers could benefit from the change.”
Malcolm Farrow, Director of Marketing and External Affairs at OFTEC (pictured), said:
“Amid the widespread speculation ahead of the Budget regarding a potential VAT cut on gas and electricity bills, our position was clear: if the government acted, it had to be fair and include off-grid homes too. It appears the Chancellor has changed course and focused mainly on reducing electricity bills. Its approach to achieving this is scrapping the ECO scheme which, amongst other measures, is expected to reduce household bills by £150.
“Questions over the exact details remain, and the statement suggests more clarity will be outlined in the upcoming Warm Homes Plan. Whilst oil heating currently remains one of the cheapest forms of heating, households are still grappling with the wider cost of living, so any reduction in their overall energy costs will be welcome.
“However, the Chancellor also set out that everyone is being asked to contribute more through rising taxes to balance the public finances. In the wider context of the drive to net zero, it’s clear the need for affordable low carbon heating solutions is even more critical. We cannot expect consumers to face rising taxes and high living costs, while simultaneously taking on the heavy financial burden of expensive new heating technologies.”
Image: OFTEC (Malcolm Farrow, Director of Marketing and External Affairs at OFTEC)
