The costs of administering the Green Homes Grant (GHG) voucher scheme amounted to more than £1,000 per home upgraded by the short-lived heating decarbonisation scheme, a damning new report from the National Audit Office has found.
The report on the GHG, published today (8 September), has also uncovered that the Department for Business, Energy & Industrial Strategy (BEIS)’s own investment committee vetoed the business case for the scheme.
Parliament’s spending watchdog has calculated that the voucher scheme is expected to upgrade an expected 47,500 homes, at a total cost to the taxpayer of about £314 million.
Of this sum, it says £50.5 million was spent on programme management and administrative expenses, which works out more than £1,000 per home upgraded.
The GHG voucher scheme was set up last summer with a £1.5 billion budget by the Chancellor of the Exchequer to carry out home heating upgrades to 600,000 households over six months.
The scheme offered homeowners the opportunity to apply for up to £5,000 funding, rising to £10,000 for those on low incomes, to install energy efficiency improvements and low-carbon heat measures
However, the botched implementation of the scheme led to its cancellation in March.
The report blames a “rushed” launch, which formed part of the Treasury’s package to stimulate the pandemic-hit economy that also included “Eat Out to Help Out”, for many of the subsequent problems that bedevilled the scheme.
It says BEIS was only given three months by the Treasury to design the GHG before its launch in September.
The initial cut-off date of 31 March this year to spend the vouchers was set to encourage home-owners and installers to make use of them as quickly as possible.
But the 12-week timescale was “overambitious” according to the NAO report, with the Treasury initially rejecting a proposal by BEIS for a two-year scheme because it wanted to prioritise the delivery of jobs through a short-term stimulus to the economy.
The rapid timescale stretched the “already limited” resources of BEIS, which was simultaneously supporting the Covid-19 Taskforce on vaccine procurement and working on activities related to Brexit.
The high level of risk surrounding the scheme was recognised by the Infrastructure and Projects Authority, which vets major government projects, says the NAO.
And on 28 September, BEIS’ own Projects and Investment Committee rejected the scheme’s full business case. It cited concerns that the GHG’s digital system had not yet been fully developed and tested, and that spending the scheme’s full £1.5 billion budget might not be feasible by the March 2021 deadline that was subsequently extended.
However, the committee was over-ruled by BEIS’ accounting officer who approved the scheme’s launch on the grounds that it formed a key part in the government’s response to mitigating the economic impacts of the pandemic.
Overall, BEIS did not “fully reconcile the tension” between creating jobs quickly and using the scheme to deliver a long-term cut in carbon impact.
The department did not sufficiently understand the challenges facing installers, failing to learn from its own previous energy schemes, such as the Green Deal introduced under the coalition government.
The report concludes: “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.
Gareth Davies, the head of the NAO said: “The aim to achieve immediate economic stimulus through the GHG 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.
Commenting on the NAO’s report, Environmental Audit Committee chairman, Philip Dunne MP, said: “Although established with good intentions, the GHG voucher scheme was a policy made on the hoof without proper consultation. A lack of understanding about installer capacity and limitations in the sector from the government, along with overambitious deadlines set by the Treasury, meant that the scheme was designed to fail to meet its ambitious targets from the outset.
“The NAO’s report is a sobering assessment of the failures in the scheme, which might otherwise have kickstarted the drive to tackle the 20 per cent of emissions emanating from the country’s housing stock. I hope the government will swiftly learn from the errors made in the design and execution of the Green Homes Grant voucher scheme. As my committee has consistently advocated, I trust Ministers will now introduce a simpler scheme of much longer duration, in which both contractors and consumers can have confidence, so we can accelerate our efforts to adapt our homes to achieve net zero Britain.”