Prime Minister warned not to overlook the 10,000 oil heated homes in Northamptonshire in VAT heating bill cuts
Over 10,000 oil heated households in Northamptonshire could miss out on cuts to their heating costs amid growing concerns the government is planning to reduce VAT on gas and electricity bills in the upcoming Budget but overlook rural communities.
The government was due to publish its landmark Warm Homes Plan by the end of October which was expected to set out proposals for how households could transition onto greener heating system. However, it was delayed leaving rural households in limbo.
With speculation the government is instead exploring prioritising gas and electricity bills for VAT discounts in the Budget, the government has been warned of a worrying trend of ignoring the needs of rural households when it comes to home heating.
In their letter to the Prime Minister, industry trade associations OFTEC, which runs an off-grid heating registration scheme, and UKIFDA, which represents liquid fuel distributors, have argued that overlooking oil heated homes for a VAT discount would be unfair and discriminatory.
The Government’s current decarbonisation policy is to incentivise households to switch to heat pumps. However, recent government demonstration projects have shown that for rural homes this could mean upfront costs in excess of £20,000. That’s because rural homes tend to be older and in need of more work to allow a heat pump to run efficiently.
This means many households who claim the £7,500 Boiler Upgrade Scheme (BUS) grant would still have to pay thousands more on top, leading to growing concerns many oil heated households would face huge challenges and obstacles to switching.
OFTEC and UKIFDA have long argued in the current cost of living crisis, consumers simply cannot afford these upfront costs. At the same time, the government doesn’t have the fiscal headroom to increase the grant funding available or invest the significant amount of money needed to retrofit the 1.7 million oil heated households through an energy upgrade scheme.
OFTEC and UKIFDA have been urging the government to instead support a renewable liquid fuel solution. A live demonstration project in 150 homes over three heating seasons has shown all existing oil heating users could make the switch to an initial blend with kerosene at no upfront cost and drastically reduce their emissions. Over 1,000 oil heated households have sent letters to their MP in the past month calling on the government to act.
Heating oil is currently exempt from excise duty but a legislative anomaly means renewable heating fuels would face an additional 10 pence per litre in duty. The government is being urged to resolve this inconsistency by removing the duty on renewable heating fuel, which would have no impact on Treasury income.
OFTEC CEO Paul Rose and UKIFDA CEO Ken Cronin said: "Once again there’s a feeling rural homes are being overlooked by this government. If the Chancellor cuts VAT for gas and electricity bills in her upcoming Budget but ignores oil heated households, what kind of message does this send to hard pressed rural communities?
“The delay to the Warm Homes Plan and a failure to come forward with a pragmatic and cost effective approach to decarbonise oil heated homes is part of a troubling pattern of failing to understand the needs of rural homes.
“The government genuinely needs to explore the range of solutions on offer outside of just electrification. We have provided overwhelming evidence that renewable liquid fuels can be delivered with minimal upfront cost to consumers and drastically cut emissions.
“We’ve also shown that there is more than enough fuel for use across the UK’s 1.7 million oil heated homes. The Government now needs to provide some certainty for rural communities who are stuck in limbo.”
For more information visit www.futurereadyfuel.info.