Heat pumps make up just 3% of installed measures under SHDF, spending watchdog finds

However, the NAO’s report found that the number of heat pump installations by December 2023, including in private homes, was less than half of planned projections.

The watchdog panned a government expectation of an 11-fold increase in heat pump installations by 2028, saying it was based on “optimistic assumptions”.

Matthew Scott, policy and practice officer at the Chartered Institute of Housing (CIH), said the report was “one of the most devastating confirmations to date that policy uncertainty and inertia continues to hold back the decarbonisation of home heating”.

The NAO also warned there was “uncertainty” over the role of hydrogen in heating homes, which was hampering investment and effective planning.

Mr Scott added: “Key government policies to improve the affordability of clean energy, drive down the cost of heat pumps, and make all new homes zero-carbon ready need to be implemented as soon as possible, and housing providers need urgent clarity on the future of the gas network to enable them to plan their long-term decarbonisation strategies.”

The report said the SHDF has “objectives focusing on fuel-poverty reduction as well as carbon reduction” and therefore “currently undertakes more energy-efficiency upgrades than low-carbon heating installations”.

The report has come in the same week that the government confirmed it has released another £75m from its £3.8bn SHDF.

Sector bodies have repeatedly called for the remaining SHDF money to be allocate in one lump sum, to give landlords certainty over the funding of upgrades.

Inside Housing revealed last month that nine councils had actually returned a total of £6.4m to the government that they had been granted under the SHDF last year.

A Department for Energy Security and Net Zero (DESNZ) spokesperson said: “By helping rather than forcing families to install heat pumps, with a 50% bigger heat pump grant, we have boosted applications by nearly 40%.

“Almost half of homes in England now have an Energy Performance Certificate [rating] of [Band] C or above, up from just 14% in 2010. We are investing billions in home upgrades, including insulating around 700,000 properties.”

The NAO report called for the government to launch a “long-term consumer engagement plan” to encourage uptake. Some sections of the national media have also run a series of negative stories about heat pumps, warning they are too expensive.

The DESNZ added: “Our Welcome Home to Energy Efficiency campaign is running on TV, radio and newspapers, reaching 16.6 million households with advice and information about how heat pumps, insulation and solar panels can cut their emissions and energy bills.”

In 2022, the spending watchdog described the Affordable Housing Programme as a poorly designed scheme marred by inadequate oversight, of which the targets set are unachievable. It said it was ultimately a programme that lacked the necessary incentives to deliver homes in areas of highest need or unaffordability.