A Parliamentary select committee has demanded urgent action be taken to improve the scheme while warning that Government is failing to grasp the enormous challenge of decarbonising the UK’s housing stock.
In its latest report, Energy Efficiency of Existing Homes, the Environmental Audit Committee (EAC) states that the Government’s legally enshrined target to be net zero carbon by 2050 will hit a roadblock unless urgent action is taken to improve the energy efficiency of UK homes in the coming decade.
With regards to the Green Homes Grant scheme specifically, the report "welcome[s] the Government’s introduction of a scheme for owner occupiers to fund energy efficiency improvements. Such a scheme is essential in order to achieve the ambition to reach energy efficient homes by 2030, given this is by far the largest pool of housing stock across the UK."
The Green Homes Grant (GHG), which was devised as an economic stimulus package in response to the covid-19 pandemic and was intended to mobilise the energy efficiency supply chain, provides vouchers worth up to £5,000 for energy-saving improvements. The £2 billion grant scheme is split into two parts: a £1.5 billion voucher scheme and a £500 million Local Authority Delivery scheme.
The scheme was launched in September 2020 and was expected by ministers to facilitate improvements for 600,000 homes by March 2021, although much larger demand was identified by a YouGov survey for the Energy and Climate Intelligence Unit.
The committee issues a scathing critique of the scheme, which it deems "rushed in conception and poorly implemented," adding that "the Government failed to consult industry adequately on its delivery, set a timescale which was overly short term and has presided over scheme administration which appears nothing short of disastrous."
The report concludes that "the impact of [the scheme's] botched implementation has had devastating consequences on many of the builders and installers that can do the work, who have been left in limbo as a result of the orders canceled and time taken to approve applications."
According to the committee, "the anti-fraud precautions have been so complex that vouchers are simply not being issued. Consumers are frustrated by delays in delivery, and the industry which the scheme was set up to support has been completely failed. Companies are losing orders, laying off staff and have warned they may close altogether. Extraordinarily, rather than providing an economic stimulus for sector recovery, the scheme’s operation may have reduced its capacity in the short term."
In November 2020, a survey of consumers conducted by the Committee revealed confusion in the face of a complex process and a lack of registered installers. In response to a paradoxically low number of vouchers being issued, the scheme was extended to March 2022 and given extra funding.
Yet, BEIS figures from December 2020 show that just under 60,000 vouchers had been applied for. And as of 8 February 2021, 22,165 vouchers had been issued to customers, with a value of £94.1 million, which is around 6% of the initial £1.5 billion budget
The report also identifies issues around cost and timing with the process of registration to Trustmark, which is required of installers to be able to take part in the scheme. This has led to a shortfall in the number of accredited installers, further complicating access to the scheme for customers.
The Energy Efficiency Association told the committee that “if there are further delays to the scheme, and vouchers are not being redeemed by mid-January 2021, the installers will not be hiring but instead there will be lay-offs and redundancies”. And the committee itself has heard evidence from the industry that small companies are having orders cancelled and having to lay off staff.
In its recommendations, the committee calls for the scheme to be "urgently overhauled and extended to provide a genuine long-term stimulus to the domestic energy efficiency sector."
The committee takes the view that the Government appears to have underestimated the costs to decarbonise UK homes by 2050, at between £35 billion and £65 billion. However, this does not include properties such as those with solid walls, or those in conservation areas which could make energy efficiency installations more challenging. Nineteen million UK properties need energy efficiency upgrades to meet EPC band C, and the EAC heard in evidence that it can cost on average £18,000 (before a heat pump installation). Therefore, the cost is likely to be far greater than the Government’s estimate.
The EAC is concerned that the Government has announced just over £4 billion of the £9.2 billion committed to in the 2019 manifesto for energy efficiency measures. To stimulate activity, schemes such as the Home Upgrade Grants, Social Housing Decarbonisation Fund and phase two of the Green Homes Grant Local Authority Delivery Scheme should be front-loaded and rolled out without delay.
The lack of Government investment and signals to the energy efficiency sector is doing little to incentivise businesses to upskill engineers and installers. Poorly designed schemes which have been rolled-out are failing to make a big impact. The Green Homes Grant, although a welcome initiative, has been laden with lengthy bureaucracy, which bizarrely has led to reports of businesses laying off staff to cover loss of income rather than creating green jobs as heralded.
Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said: “Making 19 million homes ready for net zero Britain by 2050 is an enormous challenge that the Government appears to have not yet grasped. In the next 29 years, the Government must improve energy efficiency upgrades and roll out low carbon heating measures: a material start must be made now.
“Government investment to improve energy efficiency has been woefully inadequate. The £9 billion that the Government pledged at the election was welcome, but 16 months on, there appears to be no plan nor meaningful delivery. Funding allocated for the Green Homes Grant has not been spent, with only £125 million worth of vouchers – of the £1.5 billion budget – issued.
“Further schemes that endure must be rolled out, boosting the Government’s credibility with householders and their contractors that it is determined to decarbonise the nation’s homes. This will give confidence to businesses that they can invest in upskilling and green jobs. Consumer advice must also make clear the necessity and benefits of retrofits: although installations may be disruptive for a short period, in the long run consumers can enjoy warmer homes with lower energy bills. This must be properly reflected in the system that assesses energy efficiency: EPCs are outdated and should be replaced with Building Renovation Passports, which set a clear pathway to decarbonise homes.
“Realism needs to be injected into the Government. A much better understanding of cost, pace, scale and feasibility of skills development is desperately needed for net zero Britain.”