We already know that there will be a steep rise in capital gains tax in the “horror Budget” that is planned for next month.
We may well see fresh levies on landlords, increases in inheritance taxes, a raid on pension funds and perhaps an increase in the employer’s rate of National Insurance. And yet, on top of all that the Government has another charge in store for us that it conveniently forgot to mention during the election campaign.
The boiler tax is back.
Not only is it idiotic to revive a policy that was scrapped because it didn’t work, it is just a foretaste of what is to come over the next five years. The Government is planning an ideologically driven energy policy that will plunge the economy into crisis.
It will be the unlikeliest return since the Spice Girls said they were getting back together. Most of us probably assumed that the boiler tax was dead and buried when, in a rare moment of common sense, the Sunak government decided to scrap it.
The scheme set a strict quota for a percentage of all new heating systems that had to be powered by heat pumps instead of conventional boilers, with fines for any installers who didn’t meet the target.
Given that no one was buying expensive and unreliable pumps – surprise, surprise – installers were left with no choice but to pay the fine and pass on the cost in the form of a surcharge on any customer who needed a new piece of kit.
It was, in effect, a boiler tax. And now Ed Miliband, the Energy Secretary, has decided to reimpose it from next year. If your heating packs up over the winter, prepare to pay extra to get it fixed. And pensioners already worried about losing the winter fuel allowance will have even more reason to fear freezing over January and February.
The trouble is, there are two big problems with bringing the boiler tax back.
First, it was scrapped for a very simple reason. It was completely bonkers. No one was buying heat pumps because they are poorly suited for the UK’s elderly housing stock, and it is not fair to punish the installers for not selling enough of a product that people don’t want.
Even if you did want to impose a levy on traditional heating systems, then it hardly made any sense to impose it only on people who purchase a new one, not least because it encourages people to keep running old, inefficient systems for as long as possible (we will have a similar issue with quotas for electric cars, in the unlikely event anyone in government cares about rational arguments).
It would be better to simply impose an extra charge on all heating systems. The decision to reimpose it tells us something about the green commissars now in charge of the UK’s energy policy. They don’t care about practicalities, or what works. They only care about the target.
Next, and and more importantly, it is a terrifying glimpse into how energy policy will develop over the next five years.
The Government is pressing ahead with forcing everyone to install a ‘smart meter’ despite complaints from the consumer champion Martin Lewis last week that 19pc of them don’t work. A failure rate that would be unacceptable in a toaster or a washing machine, and lethal in a car, is somehow completely fine because it is a “green product”.
Billions are about to be spent on GB Energy, even though no one seems to have the faintest idea what it will actually do apart from hiring the inevitable diversity officers. The oil and gas industry in the North Sea is being killed off, by windfall taxes, by refusing to fight legal actions by green activists, and by refusing any more development licences.
The countryside is about to be carpeted with windmills even if there is not enough storage capacity to make them effective, and there is precious little sign of either the large or small nuclear reactors that might actually make a difference getting built.
To cap it all, we will soon have waiting lists for the sale of new cars and vans, because there are quotas and fines for manufacturers to force us all to buy electric vehicles. The list goes on and on. We are only three months into the Starmer administration, and already energy policy has abandoned any contact with reality.
And yet the blunt truth is this: no economy can prosper without reliable, cheap power. According to a report from Sam Bowman and Ben Southwood only last week, British industrial energy costs are 74pc higher than in the United States, and 32pc higher than in France.
Much the same is true in the heavily regulated consumer market. We are placing a crippling burden on companies that makes it impossible for them to compete in global markets even compared to our European neighbours. And we are placing huge extra costs on households at precisely the same time as they are getting hammered with rising taxes and wages are stagnating once again.
Everyone agrees – well, almost everyone – that transitioning to a low-carbon economy is an important policy goal, and one that should be achievable as technology advances so long as we don’t try and set a global example.
But the boiler tax was a bad policy, poorly designed, and has already been shown not to work. It was quite rightly scrapped. By reviving it, Miliband and the team around him have demonstrated that they will be driven by a series of bizarre, ideologically inspired targets that don’t make any sense to anyone.
The boiler tax is just the start – it will get far, far worse over the next five years.
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