The Clean Heat Market Mechanism, widely referred to as the 'boiler tax', has been condemned as 'socially unfair' as families experience rising energy bills under the push for net zero. The Labour government's scheme is failing to achieve its primary goal, with heat pump installations declining since the policy was introduced in April 2025, according to new analysis of official figures.
How the Scheme Works
The mechanism imposes penalties on boiler manufacturers that do not meet heat pump sales targets. Critics argue this has led to higher costs for households, effectively creating a 'boiler tax'. Mike Foster, CEO of the Energy and Utilities Alliance (EUA), stated: '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.'
Impact on Households
Foster added: '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.' He described the policy as 'economically illiterate, socially unfair, and politically reckless.'
Highlighting the financial strain on families, Foster noted: 'Households across the UK are struggling to make ends meet during a prolonged cost-of-living crisis. Despite repeated assurances that the government is on the side of consumers and focused on cutting costs, the Net Zero Boiler Tax is being increased by a third.'
Rising Costs
'Adding £36 to the price of a boiler may not sound significant to those who designed this policy, but for families already facing higher food bills, fuel costs and ongoing uncertainty about energy prices, every extra pound matters,' Foster said. He explained that the Clean Heat Market Mechanism effectively fines manufacturers for missing centrally set targets, and those fines are passed on to consumers, turning it into a direct tax on households needing a new boiler.
Foster warned: 'As one energy commentator recently put it, this risks becoming a 'Sir Humphrey' policy: something that creates the appearance of action without delivering real-world results.' With accredited heat pump installations in the first quarter of 2025 reported to be lower than the previous year, that criticism may be well founded.
