Spending watchdog criticises ‘overly complex’ Green Homes Grant failure

Spending watchdog the National Audit Office has criticised the government’s failed Green Homes Grant as “overly complex” and concluded that the voucher scheme was not ready before it was launched.

The Green Homes Grant was launched by the Department for Business, Energy and Industrial Strategy (BEIS) in July 2020, as part of a series of measures to bring about a “green recovery” from the coronavirus pandemic.

The scheme offered homeowners the chance to apply for up to £5,000 funding (or £10,000 for low-income households) to install energy efficiency improvements and low-carbon heat measures in their homes.

Homeowners were expected to identify a certified installer and apply for vouchers with the installer receiving the grant funding once they had completed the work. But despite more than 169,000 voucher applications, only 47,500 homes will be supported by the scheme, compared to an initial expectation of 600,000 for the duration of the scheme.

Meanwhile, a total of £256m will be spent on Green Homes Grant vouchers under the scheme, out of an initial £1.5bn that was made available.

The NAO found that the scheme took 12 weeks from its announcement until it was launched, including time taken to design it and procure a grant administrator. It took an average of 137 days to issue a voucher to those who applied in October 2020, the first full month the scheme was in operation.

Meanwhile, only 248 installers were registered to the scheme by 6 November, rising to 1,008 by the end of the NAO’s work.

The scheme was originally due to run until March 2021 but in November 2020, BEIS announced it would be extended to March 2022. However it emerged that the scheme was not issuing as many vouchers as expected and homeowners complained they could not find installers. Meanwhile, installers complained of hold-ups in the system that delayed their payments. In March 2021, the government scrapped the scheme.

The NAO concluded that there was a “tension” between the government’s long-term aim to deliver net zero emissions by 2050, with decarbonising home heating a key part of that plan, and delivering a short-term economic boost after coronavirus.

It found that the cost of upgrading 47,500 homes, should all current applications be processed, will cost the taxpayer £314m. Of this, £50.5m is for programme management and administrative expenses, amounting to more than £1,000 per home upgraded.

Concluding its report, NAO said: “Despite the department’s considerable efforts, the rushed delivery and implementation of the scheme has significantly reduced the benefits that might have been achieved, caused frustration for homeowners and installers, and had limited impact on job creation for the longer term.

"The department and external assurance highlighted several risks of proceeding quickly, but the department accepted these risks. The fast pace constrained its procurement options, and its engagement with the installer market and, coupled with the short duration of the scheme, made it hard for energy efficiency installers to mobilise to meet demand.

“While we recognise the desire to act quickly in the interests of delivering an economic stimulus, the government should be prepared to limit or delay the launch of a programme if the evidence suggests it is not ready.”