Scrappage scheme unveiled for home boilers

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Boiler scrappage part of 'green' measures

A scrappage scheme that will pay people £400 to replace old boilers with new ones has been announced in Chancellor Alistair Darling's pre-Budget report.

"Each inefficient boiler adds over £200 to household bills and one tonne of carbon to the atmosphere," he said.

From April, some £200m would be added to help with energy efficiency to cut carbon emissions from homes, he said.

Mr Darling also announced plans to create jobs in the "low-carbon sector" and to encourage electric motoring.

A quarter of all the country's emissions come from households Chancellor Alistair Darling

"Tackling climate change will bring new opportunities for new low-carbon industries," Mr Darling said, insisting that investment to create "high-skilled, high-paid jobs" in this area would be "crucial to our future prosperity".

Energy efficient homes

Investment in a low-emissions future would thus be split between new technology on the one hand, and improvements to existing homes on the other, Mr Darling said.

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"As well as investing in clean and low-carbon technologies, we must become more energy efficient, to cut emissions as well as household bills," Mr Darling said.

"A quarter of all the country's emissions come from households."

The boiler scrappage scheme will "help up to 125,000 homes replace the most inefficient boilers with new models", he said.

Phil Bentley, managing director of British Gas, said: "this is a welcome step towards replacing Britain's four million old, inefficient boilers".

Deloitte, the consultancy, said "home owners and the environment [would] benefit greatly from the scheme".

"Domestic heating in the UK is a significant source of emissions, with boilers accounting for approximately 60% of these emissions."

Early adopters of green technology in the home would also be rewarded.

"From April, people with a home wind turbine or solar panels who plug their excess power into the national grid will receive on average £900 a year," Mr Darling said. "I intend to make this tax free."

Steve Mahon, chief investment officer at venture capital investor Low Carbon Accelerator, said: "These measures will be a real stimulus to growth for low carbon businesses in the UK next year."

Electric car boost

Electric car drivers will enjoy tax benefits

Electric motoring is also set to receive a boost.

"To help boost the number of electric cars on our streets, I have decided to exempt them from company car tax for five years," he said.

"And I can also announce a 100% first year capital allowance for electric vans."

John Lewis, chief executive of the British Vehicle Rental and Leasing Association, said: "These new measures will help speed up the mass market adoption of sustainable road transport in Britain."

Toby Ryland, tax partner at Blick Rothenberg, agreed. "Employees can expect to save several thousand pounds a year in company car tax," he said.

But industry website Fleetdirectory disagreed, insisting the tax incentives should instead have been made "available on the most fuel efficient cars available now, not electric cars that are at least 12 months away from hitting the road".

That is missing the point, according to Harvey Perkins, associate partner, KPMG, the consultancy.

"The Chancellor has provided a real incentive for employers to invest in this technology," he said.

"It's all about seeding the market. Let's not forget that when the 120g/km rule came in there were only three or four cars that were sub-120. It's around 500 now."

Discounts for the poor

Income from solar panel generated power will be tax exempt

The latest measures would further extend the Warm Front scheme, which has already helped 235,000 people insulate their houses and heat them more efficiently, Mr Darling said.

Energy efficiency in the home should also be aided by the roll-out of smart meters, which will be completed by 2020, he added.

And the £200m redirected towards energy efficiency projects would be topped up with discounts on energy bills to one million low-income households, raising the total to £300m.

Low-carbon infrastructure

At least £160m of public and private investment would be invested in low carbon projects through the Innovation Investment Fund and the Carbon Trust's Venture Capital scheme, Mr Darling said.

In addition, the government will invest £90m in the European Investment Bank's new 2020 fund, which will provide finance to the tune of 6.5bn euros ($9.6bn; £5.9bn) in infrastructure projects that contribute to emission reductions.

And more would be done to reduce the impact of coal power plants and other major carbon dioxide emitters.

"We will double our commitment and finance four Carbon Capture and Storage demonstration projects, to make us world-leaders in this vital area," Mr Darling said.

This is a "welcome development in the right direction", said Ernst & Young, the consultants.

"However, the doubling of committed funding from £90m in the 2009 budget report to £180m falls far short of amounts committed by others," it said.

"The European Commission have committed 1bn euros, the US over $4bn, while both Canada and Australia have committed far larger sums to developing the technology."