Heat pump subsidies are to be slashed to help fill a black hole in the defence budget

Published: 17:36 EDT, 12 October 2026 | Updated: 17:36 EDT, 12 October 2026 Heat pump subsidies are to be slashed to help fill a black hole in the defence budget.Energy secretary Miatta Fahnbulleh has been told to find £2billion in savings ahead of this month's Budget to help fund the Defence Investment Plan.Heat pump grants worth up to £9,000 each are in the firing line amid Treasury concerns they act as a middle class subsidy.Sir Keir Starmer signed off the long-delayed Defence Investment Plan as one of his final acts in office. But despite months of internal wrangling, funding for the package was left almost £5billion short.Andy Burnham has pledged to fill the black hole at the October 28 Budget and is now pressing departments to find savings to help pay for it.Road projects and school refurbishments could also be delayed or cancelled to help fill the black hole. But the welfare budget is set to be untouched.The government currently pays generous Net Zero subsidies to offset the high cost of heat pumps compared to conventional gas boilers.The £2.7billion 'boiler upgrade scheme' now looks set to be cut back dramatically. Energy Secretary Miatta Fahnbulleh (pictured) has been told to find £2billion in savings for this month's Budget to help fund the Defence Investment PlanFormer Tory cabinet minister Sir Iain Duncan Smith welcomed the move from a government he said was 'obsessed to the point of disaster over Net Zero'.But industry figures warned cutting the huge subsidies could push Labour's climate change targets off target.Greg Jackson, chief executive of Octopus Energy, told The Guardian: 'The market is taking off. Cutting the engine now would be brutally damaging.'The boiler upgrade scheme offers subsidies of £7,500 to people wanting to swap their gas boiler for a heat pump. Grants of £9,000 are available to those currently living off the gas grid to allow them to swap from oil-fired heating.