Audit office reports on Green Homes Voucher fiasco

[THE Green Homes Grant Voucher Scheme was delivered to an overambitious timetable and was not executed to an acceptable standard, significantly limiting its impact on job creation and carbon reduction: that was the conclusion of an investigation by the National Audit Office (NAO).

The scheme was scrapped in March after only six months in operation.

According to a report by the NAO, the government has identified decarbonising home heating as a key part of its 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 and Industrial Strategy (BEIS) ran the Green Homes Grant Voucher Scheme. The scheme offered homeowners up to £5,000 funding, or £10,000 for low-income households, for the installation of energy efficient improvements.

The department 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. The scheme did not deliver the expected number of energy efficiency home installations, or support the expected number of jobs.

According to the NAO, BEIS estimates that it will spend £314m of the £1.5bn funding available, of which £50.5m – more than £1,000 per home upgraded – will be 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.

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

BEIS did not sufficiently understand the challenges facing installers, the NAO concludes, failing to learn from its own previous energy schemes. It only consulted with installers after the scheme was announced, which limited the opportunities to include installer views in the scheme design.

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. 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 £320m provided by HM Treasury for the next financial year.

The NAO has recommended that 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, head of the NAO, commented: “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.” q