A Government scheme intended to bolster a “green recovery” from the pandemic by boosting jobs and cutting home carbon emissions “underperformed badly”, putting net zero ambitions at risk, a damning new report has found.
And it is possible the department in charge has not “fully acknowledged the scale of its failures”, according to MPs scrutinising the project.
The findings are laid out in a report published today by the Commons’ Public Accounts Committee (PAC) on the Government’s Green Homes Grant Voucher Scheme.
The scheme, which was announced in July 2020 and overseen by the Department for Business, Energy and Industrial Strategy (BEIS), was implemented as an “urgent response” to the Covid-19 crisis, the committee said.
It offered people the chance to apply for up to £5,000 in funding, rising to £10,000 for low-income households, to install energy efficiency improvements and low carbon heat measures – such as insulation and heat pumps – in their homes.
The plan was for homeowners to identify a certified installer and apply for vouchers to pay towards the work. The installer would then receive the grant funding after completing the job.
But the voucher scheme “did not perform to the department’s expectations”, the committee said.
It found that BEIS now anticipates that, by the time all remaining vouchers are processed and paid, it will have upgraded only 47,500 of the 600,000 homes it had hoped to reach.
And while it “initially anticipated” the scheme would support up to 82,500 jobs over six months, the department now expects that it will in fact manage this for only 5,600 jobs over 12 months, the report said.
In addition, the committee said the project accounted for just £314 million of its original £1.5 billion budget, and £50 million of that was administration costs – more than £1,000 per home upgraded.
The committee warned that the failure to deliver the scheme continued the Government’s “troubled record of energy efficiency initiatives” and risked “damaging the department’s future efforts to harness both consumer and industry action” to deliver on net zero commitments.
The PAC noted the Government’s “commendable intentions” for the project, but criticised its “unrealistic” 12-week timescale for implementation, from July to September 2020.
It said it was told by BEIS that the quick turnaround was “necessary to boost jobs” as a majority of the construction industry were on the furlough scheme, which was due to end.
The PAC was told that if the delivery was pushed back to the winter, it would have been “less practical to install energy efficiency measures”.
The committee added that the department proceeded with the scheme “despite its own Projects and Investment Committee rejecting its full business case”.
The result, the PAC said, was a scheme with “poor design and troubled implementation”.
It said the department “did not consult meaningfully enough with industry and consumers”, which led to an “overly complex” design, with “poor customer experiences” and a “lower uptake” than hoped.
The scheme opened to voucher applications from the public in September 2020. But roughly two months later, the PAC said “evidence began to emerge” that it was “not issuing vouchers as quickly as expected”.
A year-long extension to the scheme was subsequently scrapped, and it closed as originally planned in March 2021.
While the scheme’s “primary aim” was to “support jobs”, its “abrupt closure” may have actually led to redundancies, the PAC said.
The committee said the department “acknowledged that homeowners and installers had a poor experience with the scheme”, with more than 3,000 complaints made up to April 2021. Delays caused a headache for customers – with those who applied for the scheme in October facing a wait of up to 137 days for a voucher to be issued.
By August 2021, the committee said 52% of homeowners’ voucher applications were rejected or withdrawn, and 46% of installer applications failed.
The PAC said that difficulties relating to the “complexity” of the scheme, as well as “poor communications”, were “further exacerbated” by the “underperformance” of the administrator, ICF Consulting Services Ltd, creating delays in processing applications and issuing vouchers to homeowners, as well as making payments to installers.
“The department argued that this was the primary reason for the scheme’s poor performance, and that it had seen a lot of demand at the start of the scheme before these customer service issues arose,” the report said.
A focus on the problems with the administrator prompted concern among the committee that the department would “fail to learn from this scheme”.
“When asked what the primary failings of the scheme were, whilst acknowledging the short duration and the design of the scheme as factors, the department largely attributed its failings to the poor performance of its scheme administrator,” it said.
“This contrasted with one of the department’s ministers who, giving evidence at the Environmental Audit Committee, readily acknowledged the multiple causes of the scheme’s difficulties set out in the Comptroller and Auditor General’s report.
“The department needs to recognise the breadth and scale of what went wrong on this scheme, so that it can begin to regain the confidence of homeowners and industry in future attempts to decarbonise buildings.”
The PAC made a series of recommendations based on its findings, including that the department must “regain the confidence of consumers and industry” if it is to realise the ambitions set out in its Heat and Buildings Strategy, which aims to “significantly cut carbon emissions from the UK’s 30 million homes and workplaces”.
Dame Meg Hillier, Labour MP and Chair of the Public Accounts Committee, said: “It cost the taxpayer £50 million just to administer the pointlessly rushed-through Green Homes Grant scheme, which delivered a small fraction of its objectives, either in environmental benefits or the promised new jobs.
“We heard it can take 48 months – four years – to train the specialists required to implement key parts of a scheme that was dreamed up to be rolled out in 12 weeks.
“It was never going to work at this time, in this way, and that should have been blindingly obvious to the department. That it was not is a serious worry. I am afraid there is no escaping the conclusion that this scheme was a slam-dunk fail.
“We will need this massive, step change in the way our homes and public buildings are heated, but the way this was devised and run was just a terrible waste of money and opportunity at a time when we can least afford it.”
A Government spokesperson said: “As the National Audit Office acknowledge, the Green Homes Grant voucher scheme was designed as a short-term economic stimulus and was delivered during a global pandemic. Despite this and other challenges with delivery, all applications have now been processed, with almost 80,000 vouchers having been issued.
“We have taken the experience of the Green Homes Grant into account when designing new measures, with a commitment to go further and faster by investing £6.6 billion in improving the energy efficiency of our buildings, including £1.3 billion this year alone to upgrade up to another 50,000 homes.”