Lord Hunt of Kings Heath (Lab)

My Lords, I am most grateful to all noble Lords who have taken part in this interesting debate. The noble Lord, Lord Offord, says that although he understands the intent behind the regulations, we are clumsy and have overambitious targets. He asks us to repeat his Government’s actions in delaying or not going ahead with implementation. We are not going to do that. We are confident that we have a scheme that is practical. As a new Government, we have engaged in extensive discussions with industry. The noble Earl, Lord Russell, was critical of us for reducing the level of the fine. The fact that we have done so shows that we are concerned about ensuring that we introduce this in an evolutionary way, which is why we have started with the fines at the level we have set. We are confident that industry can rise to the challenge. The noble Lord, Lord Offord, said that sales of heat pumps were disappointing. I thought he might have said that in the last year, 2024, sales had an encouraging increase. We want to build on that with the incentivisation for householders plus the introduction of potential fines for manufacturers, although overall we think that manufacturers will be able to rise to that challenge. On the issue of cost, which a number of noble Lords raised, of course heat pumps cost more money than gas boilers, but as when one introduces most new technologies, or extends them, the price will come down. We think it will fall significantly, making pumps a more attractive and affordable options for UK households. As noble Lords have referred to, at the moment we are funding installations to kick-start the market, for example through schemes such as the boiler upgrade scheme and the warm homes local grant. The noble Lord, Lord Lilley, asked whether non-UK manufacturers of heat pumps could earn and sell credits under the scheme. The intention here is that any manufacturer of heat pumps sold on the UK market acquires credits and can make them available to other parties in the scheme. Of course, there is no obligation on manufacturers to acquire those credits; this is one of the various options available to them. In parallel, the Government are supporting the expansion of UK heat pump manufacturing through the heat pump investment accelerator competition. The noble Lord is absolutely right that further legislation would be required to revise targets for future years of the scheme. The instrument today sets a target for the first year. This would roll over to year 2 if there were no amendment by further legislation. Here, the Government have committed to consult further this year, before setting targets for future years, and then returning to the House if we wanted to change the target. I hope this reassures noble Lords that we are fully engaged with industry. We will obviously discuss the implications carefully before we come back with any further proposals.