NAO Report Damns Failed Green Homes Grant Scheme

THE GREEN HOMES GRANT Voucher Scheme was delivered to an over-ambitious timetable and was not executed to an acceptable standard, significantly limiting its impact on job creation and carbon reduction.

That’s the stark conclusion of a report published by the National Audit Office (NAO) into the Government’s failed Green Homes Grant Voucher Scheme.

The scheme aimed to help decarbonise home heating as a key part of the Government’s plan to deliver net zero by 2050.

Between September 2020 and March 2021, as part of government’s ‘green recovery’ from the COVID-19 pandemic, the Department for Business, Energy & Industrial Strategy (BEIS) ran the Green Homes Grant scheme. It offered homeowners up to £5,000 funding, or £10,000 for low-income households, for the installation of energy efficient improvements.

BEIS expected the scheme to support up to 82,500 jobs over 6 months, and enable up to 600,000 households to save up to £600 on their energy bills. It failed to deliver on both the number of energy efficiency home installations and the expected number of jobs.

£1,000 Per Home on Admin

BEIS 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.

There were 3,000 complaints made to BEIS and the scheme administrator by both homeowners and installers. 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.

Gareth Davies, the head of the NAO, said: “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 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.”

Over Ambitious Timescale

The NAO report says HM Treasury gave BEIS an over-ambitious 12-week timescale to design the scheme, consult with stakeholders and procure an administrator. At the time, BEIS was supporting vaccine procurement, and undertaking activities related to EU Exit. BEIS accepted that delivering the scheme in the timescale posed a high risk, but judged it was justified by the need to support businesses during the pandemic.

BEIS did not sufficiently understand the challenges facing installers, failing to learn from its own previous energy schemes. BEIS only consulted with installers after the scheme was announced, which limited opportunities to include installer views in the scheme’s design. The costs of installer accreditation and the short duration of the scheme (six months) deterred some installers from participating.

James Talman headshot
James Talman CEO NFRC

Chief Executive of NFRC, James Talman said: “The National Audit Office’s review of the Green Homes Grant Voucher Scheme is a confirmation of what industry has been saying from the start—the scheme was rushed, overly complicated, and there was too little engagement with key stakeholders.

 “What is critical now is that the government learns from the mistakes of the past. There must be a full consultation on any future scheme ahead of it being launched, and the Government should work closely with the construction industry to address the lack of capacity in the market through supporting upskilling, training and accreditation.”

Specialist Skills

The Green Homes Grant 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, says the NAO.

BEIS chose to proceed to its timetable, even though none of the firms that bid for the grant administration contract thought it was possible to 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 allocated by HM Treasury for the next financial year.

The NAO recommends that BEIS 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.

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