Background to the report
Reducing carbon emissions to achieve net zero by 2050 will require wide-ranging changes to the UK economy; including further investment in renewable electricity generation, as well as changing the way people travel, how land is used and how buildings are heated. Buildings account for around 19% of all UK greenhouse gas emissions.
The Department for Business, Energy & Industrial Strategy (the Department) has overall responsibility across government for achieving net zero. In July 2020, as part of the government’s ‘green recovery’ from the pandemic, the Chancellor of the Exchequer announced the Department’s Green Homes Grant Voucher Scheme (the scheme). This offered homeowners the opportunity to apply for up to £5,000 funding (£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 fitted the measure. The Department expected the scheme to run between September 2020 and March 2021, 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.
Scope of the report
This report examines the performance, implementation, procurement and management of the scheme. The report aims to identify lessons for future schemes against a backdrop of previous problematic attempts by government to implement domestic energy efficiency schemes. The NAO has previously reported on the Green Deal and Energy Company Obligation in 2016 and the Warm Front scheme in 2009.
The government has identified decarbonising home heating as a key part of its plan to deliver net zero by 2050. In establishing the Green Homes Grant Voucher Scheme, the Department worked at an ambitious pace to deliver a scheme which would contribute to this long-term aim while delivering a short-term economic boost. However, the tension between these two key aims and the short delivery time was never properly reconciled leading to an overly complex scheme that could not be delivered to a satisfactory level of performance in the time available. Should all current applications be processed, the scheme will have upgraded an expected 47,500 homes, at a cost to the taxpayer of about £314 million. Of this, £50.5 million is for programme management and administrative expenses, amounting to more than £1,000 per home upgraded. 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. Previous government attempts to deliver energy efficiency schemes, such as for the Green Deal, have amply illustrated the difficulties of achieving successful delivery in this area. It is important that the Department and HM Treasury heed the lessons from this, and previous schemes, for any future domestic decarbonisation programme.