Industry has urged Ed Miliband to be “technology agnostic” on heating, with over a million rural homes reliant on oil boilers after government reneged on a ban, despite a boost to the heat pump grant.
The Competition and Markets Authority (CMA) has recommended “stronger protections” for the approximately 1.5 million households dependent on heating oil, following an investigation into high costs.
Incoming changes to the boiler upgrade scheme will lift that grant to £9,000 from £7,500 for off-grid users, almost double the amount available for alternatives such as biomass boilers.
Government will increase the heat pump grant by 20% for rural off-grid properties next week, to persuade 200,000 eligible households to cease using heating oil.
UK Pellet Council (UKPC) chair Neil Holland denounced a government u-turn on banning fossil fuel heating. Conservatives and Labour had each planned for a “complete ban on fossil fuels” in new heating, he said, adding: “Then they backed away from it.”
There is no “silver bullet” to decarbonising home heating, according to Holland, who claimed the grants will not help up to a quarter of rural off-grid properties.
Former Conservative leader Rishi Sunak’s government had proposed to phase out fossil fuel heating in 2026, but in 2023 delayed the move until 2035. Similarly, Labour’s future homes standard, which promised to include new standards for heating from 2025, has been postponed until 2027.
This year’s £15bn warm homes plan was overly selective, according to Holland, who said government should “be technology agnostic” and “let the consumer pick the technology that works best on their particular property”.
‘Severe macro-economic threat’
Rural homes, most of which are reliant on oil boilers, are exposed to steep fossil fuel price shocks following recent energy crises spurred by conflicts in Ukraine and more recently Iran, and the blockade on shipping routes through the Strait of Hormuz.
The CMA said conflict in the Middle East led prices to surge 92% higher at their peak, with customers facing bills of £500 or more at a time. It found heating oil consumers paid £200 more for a typical 500 litre order in March 2026 than the prior month due to rising wholesale costs.
Gas dominates the 28 million homes in the UK, supplying about three-quarters of homes, so rural areas outside the gas grid are worst affected.
“It’s 5% of the homes in England, higher in Scotland, 13% in Scotland,” said Holland, who added that more than 60% of households use oil burners in Northern Ireland.
A vast majority of the UK’s non-domestic buildings located in rural areas outside the gas network are also heated with polluting fuels such as oil, liquid petroleum gas (LPG), or solid mineral fuels such as coal. Approximately 54% of targeted off-grid properties are estimated to use oil-based boilers, while less than a fifth use electric storage heating.
Climate think tank E3G’s senior policy adviser Faith Hammond warned: “The UK housing stock’s overreliance on gas for home heating represents a severe macro-economic threat and leaves households financially vulnerable.
“Each time geopolitical tensions escalate abroad and gas prices spike, British households are left footing the bill. Price shocks don’t stop at skyrocketing energy bills, they ripple through the economy.”
In response to its investigation, the CMA said it has written to LPG suppliers to remind them of their legal obligations, and said it will work with regulators and discuss a proposed compensation scheme.
It found “consumers are not as well protected as those connected to the grid”, but that “suppliers have not profited materially from the crisis”. It raised concern that people in rural areas have “less choice of suppliers and face higher prices” that customers on the gas grid in urban areas, with “clear gaps” in consumer protections available.
“The lack of protections becomes especially problematic during periods of volatility,” the CMA said in a statement, as demand means heating oil users face “substantially higher prices”.
Its new recommendations included minimum standards for suppliers and a register for vulnerable customers, a price checker, as well as reviewing regulations around minimum order volumes.
“Stronger safeguards are needed – including regulatory oversight and better support for vulnerable consumers as well as communities living in areas of the UK that are particularly exposed to higher and more volatile prices,” said CMA chief executive Sarah Cardell. “We have also found that around 1,700 customers were left in limbo by some suppliers after orders were cancelled as the crisis was unfolding.”
Mitsubishi Electric’s Achilleas Georgiou added that despite the heat pump incentives, renewable alternatives will remain out of reach for millions of UK homes due to the price of electricity being tied to gas.
He said, “renewable alternatives like heat pumps will be out of reach for millions of UK homes as long as electricity remains three to four times more expensive per kilowatt-hour than gas”.
“Policies that help to bridge this ‘spark gap’ will do more than anything to improve confidence in making the switch from gas boilers, and support the UK’s move to energy independence,” Georgiou added.
Another of think tank E3G’s policy advisers Leo Vincent called displacing gas “a national security imperative”, warning that fossil fuel infrastructure “is significantly more vulnerable to attack” than an electrified energy system.
Rural homes ‘harder to heat’
Rural homes are in a predicament, because “dirty” oil systems “are really cheap to put in”, Holland explained.
Climate Change Committee boss Emma Pinchbeck warned in June that heat pumps remain among the most expensive in Europe in the UK, and that higher subsidies are needed for heat pumps to make them cheap enough to be widely adopted.
Holland said that a significant proportion, about a quarter of the number of rural homes outside the gas grid, are not suitable for heat pumps: “We’ve got some research done for us which showed that there was a minimum of 420,000 of those that will never be suitable for air source or ground source heat pumps.”
The UKPC claims biomass boilers should have equal grants to heat pumps, which it claims are not suitable for a quarter of homes in rural areas, including heritage grade 1 and 2 listed buildings in these regions.
According to Holland, houses are typically detached in rural areas, he said, and they tend to be larger, “so they’re harder to heat”, and insulation of such properties is costly.
“Whereas the typical system you would have is a gas boiler that heats up to maybe 70 or 80 degrees, heats the radiators, and it’s a high enough heat that it actually, even though there’s heat loss, it still will heat the home,” he said.
Since the government decided not to prohibit the installation of off-grid oil burners as was expected to happen this year, following suit with Austria, Holland argued that there is “no incentive to fit a renewable”.
Policy kicked ‘can down the road’
As the UK awaits new leadership, if he had to give current energy secretary Miliband one piece of advice, Holland said it would be “having one specific rural policy for both homes and businesses”.
“You have to base your policy around the actual properties that you have, and rural properties are completely different from urban properties,” he said.
Holland said government policy has kicked “the can down the road”, comparing the about-face on fossil fuel heating to delays to the electric vehicle mandate.
“The oil price has gone through the ceiling,” said Holland. “A lot of the rural MPs were coming in saying, we have got to do something here, we have got to help people, because the oil price has gone nuts.”
But he said that instead of subsidising, there was no available methodology for subsidising oil users.
The flip-flopping on policy means consumers will opt to use “petrol for a while more, and so government have to focus and say, if you’re looking to reduce carbon, then you need to have all of your policies going in that direction”, he said.
“It’s not one-size-fits-all,” he said, warning that an unlevel playing field has “forced” households into a decision they “don’t want to make”.
“If you want to move away from fossil fuels, you have to give clear signals,” said Holland, who argued government should stick to a timeline, “then people will make decisions.”
While the political impetus is around electrifying generation, he added: “What happens if the property can’t use electrified heat?”
He claimed hard to heat homes are being neglected by policy-makers as they are the most difficult to decarbonise.
Heating oil is priced daily and for energy traders, there’s no fixed price. Recent events mean prices have spiked, which is “tough” on rural customers.
In March, the UK government provided over £50m to subsidise energy costs, due to “massive increases”, as homes that use natural gas benefit a ceiling on prices due to the price cap.
“They have accepted that biomass should be used as part of the BUS, but they haven’t upgraded the grant for those rural homes,” said Holland, arguing that biomass boilers lead to 98% carbon savings due to replanting.
“And whenever you look at the actual cost of installation, their own figures actually show that the equivalent system, a pound per kilowatt fitted biomass is half the price of a pump.”
The political vacuum on alternative boilers leaves “a situation where there’s neither carrot nor stick at the moment, because if you don’t have the proper incentive to do anything”.
“People are going to do whatever’s cheapest for them, and in this case, oil has been very cheap, but now it has doubled in price,” he said. “You’ve got an incentive for somebody to move away from the fossil fuel into renewable technology if you incentivise it properly.”
Without banning fossil fuel heating, more homes could also rely on coal, Holland warned.
“Deals that were done in the 1980s where the coal miners were basically promised coal for life,” he said. “So you’ve got a situation where the UK government’s paying for coal to be brought in from Poland to supply homes in the UK.”
Holland added that: “The grid won’t be 100% clean until at least the 2040s.”
He claimed that switching to a biomass boiler saves 8.9 tonnes of carbon a year, more than the estimated heat pump savings of 1.4 tonnes of carbon a year.
Biomass boilers, costing up to £17,000, remain far more expensive than heat pumps, but have larger capacity, he argued, at up to 30 kW in size.
Jessica Mills Davies is senior London correspondent at Energy Voice. She’s spent 20 years as a journalist covering energy, finance, climate, and investigations.
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