Heat pumps absorb heat from different sources (Air, Ground, Water, etc) which is passed through a compressor and can then be used to heat underfloor heating systems, radiators, warm air systems or water. They work in exactly the same way as a refrigerator which extracts heat from inside and transfers it out.
Electrical energy is used to concentrate the heat energy from low temperature to warm temperature required by the house.
The Energy Saving Trust website presents a guide to possible savings in money and carbon.