ECONOMICS

The Government is to provide £5000 grants to 90000 households to install heat pumps. It hopes the cost of the pumps will come down with increased sales. Firstly there should be a subsidy to reflect the energy produced and thus reducing the need for massive public investment in new power stations. Secondly what is to stop the manufacturers of heat pumps to increase their wages and bonus’ in line with increased sales. Surely it would be better for government to take a share in these companies and use the investment to increase production and efficiency? The tax payer would get a return and ultimately the company could be sold. I am sure the Government could also offset the investment so it was not listed as an expenditure, thus appeasing the Treasury.