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National Audit Office brands Green Homes Grant ‘over ambitious’, poorly executed

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Green Homes Grant

The National Audit Office has released a scathing review of the Green Homes Grant, noting that it was over ambitious and not executed to an acceptable standard. 

The Green Homes Grant was designed to help kick start the UK’s so-called Green Revolution, with the Government offering to cover up to two-thirds of the cost of installing green home upgrades. 

The scheme allowed homeowners to subsidise the cost of installing a heat pump or improving insulation, with secondary benefits coming in the form of upgraded double glazing. In fact, you can read more about everything that was initially promised under the scheme here

Unfortunately between announcement and launch the scheme was watered down, with improvements such as energy efficient lighting upgrades removed altogether. This was the first warning sign that the scheme may not live up to its promise, but according to the National Audit Office, the scheme was unlikely to ever be a success. 

Meg Hillier MP, Chair of the Committee of Public Accounts, commented, “The Green Homes Grant scheme was set up to fail, with an undeliverable timetable and overly complex design which took little account of supplier and homeowners’ needs.

“Government now expects the scheme to deliver only a small fraction of its targets for jobs supported and homes upgraded.

“Meanwhile, the Government expects to spend over £50 million administering the scheme – an astonishing cost of over £1,000 per home upgraded.

“The Government cannot hope to achieve its net zero ambitions if it doesn’t learn the lessons from this botched scheme.”

According to the report: 

The Government originally expected the scheme to support up to 82,500 jobs over six months, and enable up to 600,000 households to save up to £600 on their energy bills. However, the scheme did not deliver the expected number of energy efficiency home installations, or support the expected number of jobs. In total, the Department for Business, Energy & Industrial Strategy estimates that it will spend £314 million of the £1.5 billion funding available, of which £50.5 million (more than £1,000 per home upgraded) is on administration. It forecasts that the scheme will eventually support efficiency measures in 47,500 homes, and create up to 5,600 jobs over 12 months.

Many homeowners and installers had a poor experience using the scheme. There were delays issuing vouchers to homeowners and paying installers, causing frustration. Homeowners also found it challenging completing applications, and were often asked for more information, which took time. From October 2020 to April 2021, over 3,000 complaints were made to the Department and the scheme administrator.

HM Treasury gave the Department an over-ambitious 12-week timescale to design the scheme, consult with stakeholders and procure an administrator. This came at a time when the Department was supporting vaccine procurement, and undertaking activities related to the EU Exit. The Department accepted that delivering the scheme within this timescale posed a high risk, but judged it was justified by the need to support businesses in the wake of the COVID-19 pandemic.

The Department did not sufficiently understand the challenges facing installers, failing to learn from its own previous energy schemes. Other energy schemes have shown the need for a robust evaluation of stakeholders’ views. The Department only consulted with installers after the scheme was announced, which limited the opportunities to include installer views in the scheme design. The costs of installer accreditation and the short duration of the scheme when it was first announced (six months) deterred some installers from participating.

The Department did not fully manage the tension between maximising long-term reductions in carbon emissions, and creating jobs in the short-term. The scheme focused on measures that would provide the biggest impact on reducing carbon, such as insulation and low-carbon heat installations. These require specialist skills to install, which meant it took some time for employers to take-on and train staff. Jobs might have been created more quickly in areas that require less specialist skills, such as window and door installation. The initial plan for a two-year scheme would have allowed more time for jobs to be created, but this was rejected by HM Treasury.

The Department chose to proceed to its timetable, even though none of the firms that bid for the grant administration contract thought it was possible to fully implement the required digital voucher application system in the time available. By March 2021, the required system was still not in place, and much more manual processing was required for applications than expected, contributing to a growing backlog. The Department decided to close the scheme in March 2021, reasoning that insufficient improvement had been made, and that existing voucher applications would fully use the £320m provided by HM Treasury for the next financial year.

The NAO recommends the Department should engage properly with the supplier market for future decarbonisation schemes, and base its planning on a realistic assessment of how long it will take the market to mobilise. The requirements placed on homeowners and installers for such schemes should be tested from the start, with the aim of simplifying administration.

Gareth Davies, the head of the NAO, added, “The aim to achieve immediate economic stimulus through the Green Homes Grant voucher scheme meant that it was rushed. As a result, its benefits for carbon reduction were significantly reduced and ultimately, it did not create the number of jobs the Government had hoped for.

“Decarbonising our homes is a key element of the government’s net zero strategy. It is vital that future schemes learn from this experience”

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