Heating oil crackdown mooted as heat pump grants face the axe

Homes that heat with oil could get new protections from price spikes, while the grant that helps them switch to a heat pump altogether may be cut to pay for defence spending.

What's happened

According to the End Fuel Poverty Coalition, media reports suggest the government will accept a Competition and Markets Authority recommendation to regulate the heating oil market. The coalition says the CMA's review followed a spell of record heating oil prices caused by conflict in the Middle East, and found that 1,700 households were owed compensation after suppliers cancelled orders and made them re-order at a higher price.

Ministers have reportedly said they will work with industry on a new regulatory regime, tighten Codes of Conduct in the short term, and look again at minimum order volumes of 500 litres. The coalition points out that heating oil sits outside the Ofgem price cap that protects gas and electricity customers, so households are directly exposed when global prices move. It cites a price run from around 60p a litre to over 120p in early March, a fall back to roughly 70p by July, and a renewed climb above £1 a litre in September as the backdrop to its call for an Emergency Heat Tariff this winter, with heating oil capped at £1 a litre.

The coalition also says oil-heated homes can currently get a £9,000 discount on a heat pump through the Boiler Upgrade Scheme, but that the scheme is rumoured to be facing cuts from the Chancellor to help fund the Defence Investment Plan. As its spokesperson put it, axing the grants while oil households are stuck on "the fossil fuel price rollercoaster" doesn't sit well with the government's own energy security goals.

What it means for your costs

If you're on oil heating, there are two separate things to watch: what regulation might do to your fuel bills, and what might happen to the grant that currently helps pay for a way off oil altogether.

Nothing here changes what you pay for fuel oil itself - that's a commodity and tariff question, not a renovation one. But it's a reminder that oil remains one of the more volatile ways to heat a home, and that the main financial route off it, a heat pump, currently comes with support that may not last.

As things stand, the Boiler Upgrade Scheme offers £7,500 off an air source or ground source heat pump in England and Wales, provided the installer is MCS certified; in Scotland, the Home Energy Scotland grant offers up to £7,500 plus an optional £7,500 interest-free loan. On top of that, installing a heat pump currently qualifies for 0% VAT on the materials, part of the relief on energy-saving installations that runs until 31 March 2027. Longer term, the Warm Homes Plan published in January 2026 sets out £15bn of funding to 2030, including grants for low-income households and interest-free or low-interest loans that are being phased in - though none of that changes the position on the Boiler Upgrade Scheme today.

Our live cost model puts a typical 8 kW air source heat pump at £12,900, with most installations falling in the £10,000 – £16,700 band depending on house size, existing pipework and radiator changes. Knock a current grant off that and the gap to a like-for-like gas boiler narrows considerably; lose the grant and it widens again. If you're weighing up a heat pump against a new gas or oil boiler, it's worth getting quotes now rather than waiting to see what happens to the scheme, since MCS-certified installers can only apply the grant while it's still running. See our Air source heat pump for how we build that estimate - labour hours and local installer rates plus equipment costs, checked against market prices and real quotes.

Whatever you decide, get more than one quote, and use our "is my quote fair" tool to check any heat pump or boiler quote against local rates before you sign anything. If you're sticking with oil heating for now, keeping an eye on supplier conduct and order terms is sensible while the regulatory picture is still being worked out - the coalition's account suggests that's exactly the kind of thing ministers are looking to tighten up.