Audit finds that Green Homes Grant was ‘too ambitious’

An audit from the National Audit Office (NOA) into the Green Homes Grant voucher scheme has found that it was delivered to an over-ambitious timetable, and was not executed to an acceptable standard, which significantly limited its impact on targeted job creation and carbon reduction.

The Green Homes Grant scheme was scrapped in March 2021 due to poor uptake after being criticised for being too complicated, taking up too much administration and a lack of scheme credited installers across the country.

The objective
The government has been aiming to decarbonise the built environment as part of its plans to deliver net zero by 2050. Between September 2020 and March 2021, as part of the government’s ‘green recovery’ from the pandemic, the Department for Business, Energy & Industrial Strategy (BEIS) was tasked with managing the Green Homes Grant voucher scheme, which would offer homeowners up to £5,000 funding (£10,000 for low-income households) for the installation of energy efficient home improvements.

The BEIS 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 BEIS forecast the scheme will eventually support energy efficiency measures for just 47,500 homes and only create up to 5,600 jobs over 12 months.

In total, the 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.

Too ambitious
There were delays issuing vouchers to homeowners and paying installers, with homeowners finding it challenging completing applications and often asked for more information, which took time. From October 2020 to April 2021, over 3,000 complaints were made to the BEIS and the scheme administrator.

HM Treasury gave the BEIS an over-ambitious 12-week timescale to design the scheme, consult with stakeholders and procure an administrator. This came at a time when the BEIS was also supporting vaccine procurement, and undertaking activities related to Brexit.

While the BEIS accepted that delivering the scheme within this timescale posed a high risk, it believed it was justified by the need to support businesses in the wake of the pandemic.

The BEIS 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.

Poor management
The BEIS 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 employers would have to spend time training staff. Jobs might have been created more quickly in areas that required 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.

Impossible time frame
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 BEIS decided to close the scheme in March 2021, reasoning that insufficient improvement had been made, and that existing voucher applications would fully use the £320 million provided by HM Treasury for the next financial year.

The NAO recommends the 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.

Industry thoughts

Commenting on the Audit, James Talman, chief executive of National Federation of Roofing Contractors (NFRC), said: “The NOA’s review of the Green Homes Grant voucher scheme is a confirmation of what the 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.

Brian Berry, chief Executive of the Federation of Master Builders (FMB), concurred with James, saying: “Today’s report from the NAO on the performance of the Green Homes Grant scheme is sadly unsurprising in its damning conclusions.

“Members of the FMB who are local, small builders, ideally placed to deliver green upgrades to people’s homes, found the system overly complex, and of the 200 companies who expressed an interest, just three went on to become accredited. We need the government to back a long-term retrofit strategy, to give installers confidence to train and certainty that the rug won’t be pulled from under them.”