Homes could have a number of upgrades under the Green Homes Grant. Photograph: Gareth Simkins Homes could have a number of upgrades under the Green Homes Grant. Photograph: Gareth Simkins

Explainer: The end of the £1.5bn Green Homes Grant

New applications to the Green Homes Grant end tomorrow, cut short after only six months after limited uptake and administrative problems. Here’s what you need to know.

What was the Green Homes Grant?

The £2bn Green Homes Grant scheme was announced in last summer’s ‘mini-budget’, intended to act as both an economic stimulus for the construction industry during the height of the pandemic and to help the country decarbonise.

It covered up to two thirds of the cost of insulating walls, floors and roofs, replacing single-glazed windows with double or triple glazing, and low-carbon heating such as air-source heat pumps, up to a maximum of £5,000, or £10,000 in certain cases. Many other upgrades were also available, such as heating controls, replacement doors and draught proofing.

The Treasury agreed to pick up the whole bill for low-income households, via a £500m part of the scheme delivered by local authorities.

Alok Sharma, then business and energy secretary, described the scheme as “a key part of our plans to build back greener, helping make 600,000 homes more energy efficient with government vouchers, while supporting 100,000 skilled jobs and supporting our transition to net zero carbon emissions by 2050.”

It was launched in September, the government’s first intervention in home energy efficiency upgrades since the abortive Green Deal.

What was its reception?

Speaking at the time, the Commons’ Environmental Audit Committee’s chair Philip Dunne described the £2bn package as “a promising start”, but added: “There needs to be a long-term, sustainable approach that can help improve the energy efficiency of the 19m UK homes EPC rated D or worse.”

Though supportive, Nina Skorupska, the chief executive of the Association for Renewable Energy and Clean Technology, said the funding was “a mere drop in the ocean of what is needed to truly stimulate the economy and set the government on track for net zero by 2050”.

There were also some doubts about how effective it would be. “It is absolutely possible to take a typical semi-detached, 50-year old home and turn it into a near zero carbon building: but it’s a bit more complicated than just adding insulation to the loft”, said Anastasia Mylona, head of research at the Chartered Institution of Building Services Engineers.

Chris Roberts, assistant lecturer at Birmingham City University’s School of the Built Environment, questioned whether the funding was targeted in the right way, saying that the replacement of gas boilers was a more pressing concern than insulation, which can also lead to damp and condensation, he added.

What went wrong?

The grant was managed with “staggering ineptitude” according to the shadow minister for climate change, Matthew Pennycook, while Greenpeace branded it “shambolic”.

Payments to contractors were subject to extended delays, making businesses reluctant to participate and forcing some to lay off staff to cover the loss of income. Some firms were overwhelmed with more work than they could undertake – a symptom of an inadequately skilled supply chain, according to Nick Molho, executive director of the Aldersgate Group.

But there was also a more fundamental problem. Though it was intended to respond to the pandemic, householders were put off by the risk of catching the disease from letting installers into their home, contributing to lower uptake than first assumed.

In contrast, the parallel scheme administered by local authorities scheme has gone fairly smoothly.

What happened in the Budget?

On 3 March, chancellor Rishi Sunak’s Budget made no mention of the grant, though there were reports that it had been substantially underspent and would be curtailed.

Sam Alvis, head of green renewal at the Green Alliance think tank, said it was “the elephant in the room. The grant was the government’s flagship green job programme, but its absence from the Budget gives little confidence that it isn’t going to be scrapped. Pulling moderate spending packages like this is not a good sign”.

The Conservatives’ manifesto pledges for a £2.5bn Homes Upgrade Grant for low-income households and a £3.8bn Social Housing Decarbonisation Fund, were also absent from the government’s spending plans.

What has happened now?

The end of the scheme was announced on Saturday, with the last vouchers available to be claimed by 5pm tomorrow (31 March).

Given the need to obtain quotes before vouchers may be obtained, it is hard to see how any new applicants could meet the deadline.

Richard Beresford, chief executive of the National Federation of Builders (NFB), said: “In order to access this scheme, thousands of small businesses jumped through costly hoops to win this work. Closing it with four days’ notice is completely disrespectful and some small businesses will close because of it.”

The group said that it had warned civil servants about the scheme before it was opened, but its concerns were ignored even as its failure was evident.

What happens next?

The government is looking to local authorities to pick up the slack.

The Department for Business, Energy and Industrial Strategy attempted to sell the end of the Green Homes Grant by heralding “£300 million extra funding for green home upgrades”. Some of the cash left unspent has been diverted into the Green Homes Grant’s Local Authority Delivery Scheme and the Social Housing Decarbonisation Fund Demonstrator. 

What has uptake been like?

To date, more than 96,000 applications for vouchers have been made, though only 39,000 have been issued. The government expects to spend around £300m on them in all.

The original Local Delivery Scheme is helping around 50,000 households in England with an income of under £30,000 a year.

What are the implications of closure?

The building industry was united in concluding that the closure of the Green Homes Grant would damage the retrofit sector and that a full-scale National Retrofit Strategy was needed to replace it.

Brian Berry, chief executive of the Federation of Master Builders, said: “The misguided scrapping of the Green Homes Grant scheme sends entirely the wrong message to consumers and builders, and will harm the UK’s desire to be seen as a global leader in tackling climate change.”

“The government needs to be more ambitious in its thinking and set out a long-term plan to upgrade our existing homes to make them greener and more energy efficient. A national retrofit strategy would address this need and allow the government to be taken seriously as well as regain the trust of industry.”

Rico Wojtulewicz, head of housing and planning policy at the NFB said: “Had anybody listened to industry, this could have been a successful scheme. The government needs to create a market environment for retrofitting works and understand that there isn’t yet the skilled workforce in every area to complete retrofitting works at the standard the government set.”

Once a pathway to raising the skills base has been set out, the government must allow professionals accredited to comparable retrofit standards other than TrustMark or the Microgeneration Certification Scheme to conduct work under the grant’s successor, according to the association.

Market incentives are also needed, the NFB said, such as offering a rebate on stamp duty when new homeowners can raise a house to EPC level C within two years, and removing VAT on retrofits.

“With these four very simple policy changes, our COP26 blushes will be spared, industry trust will start to be rebuilt and the NRS, which is our best opportunity for change, will start from the best position possible,” Wojtulewicz added.

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