ICAEW.com works better with JavaScript enabled.

NAO flags failings in Green Homes Voucher Scheme

Author: ICAEW Insights

Published: 07 Sep 2021

A government scheme designed to increase the energy efficiency of homes was delivered to an over-ambitious timetable, significantly limiting its impact on job creation and carbon reduction, according to a new National Audit Office report.

The National Audit Office (NAO) report examining the Green Homes Voucher Scheme found that 16% of the funding delivered to homeowners was spent on administration fees, the equivalent of more than £1,000 per home upgraded. In total, the government now estimates it will spend £314m of the £1.5bn funding available, of which £50.5m is on administration.

Between September 2020 and March 2021, the scheme offered homeowners up to £5,000 worth of funding (or £10,000 for low-income households) for the installation of energy-efficient improvements as part of the government's ‘green recovery’ from the COVID-19 pandemic. The government has identified decarbonising home heating as a key part of its plan to deliver net zero by 2050.

The Department for Business, Energy & Industrial Strategy (BEIS), which ran the Green Homes Grant Voucher Scheme, originally said it expected the scheme to 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. Current forecasts suggest that the scheme will eventually support efficiency measures in 47,500 homes and create up to 5,600 jobs over 12 months.

The government spending watchdog says HM Treasury gave the BEIS an overambitious 12-week timescale to design the scheme, consult with stakeholders and procure an administrator. This came at a time when the department was supporting vaccine procurement and undertaking activities related to EU Exit. BEIS accepted that delivering the scheme within this timescale posed a high risk, but judged it was justified by the need to support businesses in the wake of the COVID-19 pandemic.

According to the NAO report, many homeowners and installers had a poor and frustrating experience using the scheme including delays issuing vouchers to homeowners and paying installers and a challenging and often time-consuming application process. From October 2020 to April 2021, BEIS and the scheme administrator received over 3,000 complaints.

The NAO also stated that BEIS had failed to sufficiently understand the challenges facing installers or learn from its own previous energy schemes, which had already flagged up the need for a robust evaluation of stakeholders’ views. The department only consulted with installers after the scheme was announced, which limited the opportunities to include installer views in the scheme design. The costs of installer accreditation and the short duration of the scheme when it was first announced - six months - deterred some installers from participating.

The NAO recommends that BEIS should engage properly with the supplier market for future decarbonisation schemes and base its planning on a realistic assessment of how long it will take the market to mobilise. The government spending watchdog also warned that the requirements placed on homeowners and installers for such schemes should be tested from the start, with the aim of simplifying administration.

Alison Ring, Director, Public Sector, at ICAEW commented: “It’s absolutely crucial that government learns lessons from the grant voucher scheme when designing future green energy policy. If there is to be cost effective delivery of net zero by 2050 then this is certainly not the way to go about it, given that administration costs were 16% of the overall scheme spend.” 

Gareth Davies, the head of the NAO, said it is vital that future schemes to encourage decarbonisation learn from this experience: “The aim to achieve immediate economic stimulus through the Green Homes Grant 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 the government had hoped for.”

Recommended content

A megaphone
Stay up to date

You can receive email update from ICAEW insights either daily, weekly or monthly, subscribe to whichever works for you.

Sign up
Daily summaries
Three yellow pins planted into a surface in a row
News in brief

Read ICAEW's daily summary of accountancy news from across the mainstream media and broader financing sector.

See more