A cross-party group of MPs has written to the UK government asking them to expand the number of low-carbon heating technologies that qualify for VAT relief.
The letter, addressed to Exchequer Secretary to the Treasury James Murray, urges the government to include heat batteries as Energy Saving Materials (ESMs) in the Autumn budget, and thus have them qualify for VAT relief. The letter was sent in tandem with a letter on the same subject from top industry experts, including representatives from Centrica, OVO Energy, E.ON, and Thermal Storage UK.
The current ESM offering allows a small number of low-carbon heating technologies, namely heat pumps, to be sold VAT-free. However, the authors of these letters note that heat pumps are not suitable for all households; around 20% of UK homes may not be able to accommodate heat pumps, leaving over 5.5 million people without access to VAT-free low-carbon heating.
The signatories argue that heat batteries offer a viable alternative to heat pumps that use existing home heat infrastructure, and emphasise that extending ESM status to heat batteries will provide massive benefits in particular to smaller low-income households, which often lack the outdoor space to install heat pumps. Compared to electric boilers, heat batteries cost half the amount to run.
“I know first-hand from my constituents in Manchester Rusholme the devastating impacts high energy bills are having on low-income households as thousands are driven into fuel poverty every year and so many people are still wondering how they are going to make ends meet” states Afzal Khan, Labour MP for Manchester Rusholme and signatory of the letter.
“This is why I support proposals to extend ESM status to heat batteries which, under the right policy framework, will save low-income households hundreds of pounds per year and get Britain back on track to meeting our climate targets.”
Tom Pakenham, commercial director of Centrica New Business & Net Zero, added: “Helping the UK reach net zero needs to be simple and affordable for households. Providing VAT relief on a whole range of low carbon technology will give homeowners more choice on the solutions that will help to decarbonise their homes.”
“The Secretary of State for Energy Security and Net Zero has expressed a commitment to decarbonising millions more households,” explained Johan du Plessis, CEO of heat battery manufacturer Tepeo. “By widening the list of ESMs to include heat batteries, the government can fulfil this ambition and support households in making sustainable choices that suit their unique needs.”
