What the Autumn Statement means for heat pumps

jeremy hunt
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Jeremy Hunt delivered his Autumn Statement yesterday with “110 measures to help grow the economy”.

The statement included the move to include full expensing for capital investment that could benefit renewables, accepting the recommendations of the Winser Review to improve grid connections and connect more renewables, and increased spending on local mitigation projects to unlock house building in a bid to get around nutrient neutrality rules.

It also contained some news around heat pumps, including a consultation on the current restriction on heat pump installations one metre from a boundary property and zero-rate VAT being extended to include technologies such as water-source heat pumps.

Matthew Aylot, Senior Policy Adviser at DESNZ, posted on LinkedIn:

In case you missed it, here’s a summary of all the key heat pump related announcements from today’s Autumn Statement:

💷 On VAT, we’re extending the zero-rate of VAT to include more technologies, like water-source heat pumps. More details to follow shortly.

📄 On planning, we will consult on introducing new permitted development rights to end the blanket restriction on heat pumps one metre from a property boundary in England.

⚡️On electricity connections, we published our Connections Action Plan with Ofgem that listed the actions we’re taking to streamline the connection process and reduce delays where services need to be unlooped or fuses upgraded to accommodate a heat pump.

🏭 On capital allowances, Treasury made permanent the temporary introduction of full expensing of qualifying plant and machinery announced in the Spring Budget. This means that investments made by companies in qualifying plant and machinery, after 1 April 2026, will continue to qualify for a 100% first-year allowance for main rate assets, and a 50% first-year allowance for special rate (including long life) assets. It was also announced that the government will  launch a consultation on wider changes to simplify the UK’s capital allowances legislation

Responding to the announcements, Frank Gordon, Director of Policy at the REA (Association for Renewable Energy and Clean Technology), said:

The Chancellor’s Autumn Statement revealed some welcome and long needed measures to speed up grid connectivity, while conformation of permeant tax allowances for businesses investing in plant and machinery, should also help incentivise companies to deploy renewable and clean technologies to help them decarbonise.

In light of economic forecasts estimating rising inflation and lower growth, the REA reiterates the singular economic growth opportunities of renewable energy and clean technology.

We are clear, tackling climate change and boosting our economy is not an ‘either-or’ decision. We cannot forget that rising energy prices were the major source of inflation in the past year and the only way to remove this risk to the economy is move rapidly to renewables and end reliance on imported fossil fuels.

In order to secure better economic prospects in the long-term, we must speed up the transition to a green economy and do more to support the decarbonisation of the heat, transport, and heavy industry sectors.

Gillian Charlesworth, CEO of the Building Research Establishment (BRE), said:

The Chancellor has made several pledges to invest more in the clean energy sector in [today’s] Autumn Statement, which should go some way towards accelerating the net zero transition.

We welcome the £4.5bn investment in strategic manufacturing sectors – including clean energy – alongside the further £960mn under the Government’s Green Industries Green Accelerator programme, which will be provided to green industries to support their manufacturing capacity. We hope that this funding will upskill workers in local areas and boost the capacity needed to meet our net zero commitments.

Similarly promising was the extension of VAT relief available on energy-saving materials for householders and charitable buildings. We welcome this to ensure households can use a wider range of technologies as part of the initiative to support Britain’s green transition.

What was missing, however, was a promise to invest in the clear, long-term plan we so urgently need to transition our homes and buildings away from fossil fuel gas. Decarbonising our building stock needs to be a core part of the green transition – crucial detail that was also missing from the Energy Act.

A national retrofit strategy will involve several stakeholders, most notably consumers, but also industry and local authorities, who will require the necessary backing and support to ensure it is successful. Failing this, we risk losing significant momentum on the drive to net zero.