Scrapping the Green Homes Grant could have disastrous consequences for UK energy targets

With its potential to create 100,000 skilled jobs and decarbonise the UK’s draughty housing stock, the Green Homes Grant seemed like the perfect opportunity to marry the government’s ‘levelling up’ and net-zero agendas. It was designed as a short term stimulus set to run through to March 2022, providing households with grants of up to £5,000 or £10,000 to install low-carbon heating and insulation. Yet, the government scrapped the scheme at the end of last month a year earlier than planned, with little explanation on the announcement.

The absence of an explanation is somewhat unsurprising given the scheme’s lacklustre performance. Just prior to the grant being scrapped, the Environmental Audit Committee released a damning report regarding the efficacy of the government’s home improvement and energy efficiency schemes, one of which is the Green Homes Grant.

The report highlighted that the scheme only achieved 10 per cent of its target to improve 600,000 homes in six months, and was hampered by difficulties faced by businesses in ramping up their supply chains, as well as a skills shortage of trained installers for green retrofits. This was worsened by the government’s lack of long-term targets for home improvements, as well as “stop-start” spending and policy announcements, which cast a shadow of uncertainty over the scheme’s longevity. The widely reported poor administration of the Green Homes Grant, particularly delays for the issuing of vouchers and payments, has also ensured that the scheme has been anything but a success.

The UK housing stock is among the most inefficient in Europe, and is responsible for one-fifth of our carbon emissions. Evidently, its decarbonisation is critical if the UK is to achieve its net-zero emissions by 2050 target. There is still a long way to go, with 19 million homes across the UK failing to meet a minimum Energy Performance Certificate (EPC) rating of ‘C’ – the rating recommended by the Committee on Climate Change that all buildings achieve over the next 10 to 15 years.

With the Green Homes Grant eliminated from the housing policy landscape, questions are rightly being asked as to what its successor should be. Taking lessons from the failure of the Green Homes Grant, any new home improvement scheme should provide long-term, consistent financial support and incentives to encourage private retrofitting and send a clear message to businesses and their supply chains. In Bright Blue’s report, Better homes, we suggested introducing government-backed low-interest ‘Help to Improve’ loans to help finance home improvements and energy efficiency retrofits.

There should be regulatory backstops as well. Establishing an end date for the sale of carbon-intensive home heating, such as fossil fuel boilers, is one way to ensure a shift towards low-carbon heating. This was mooted in a recent report by the Regulatory Assistance Project. The same principle – implementing a sales ban – has been highly effective at encouraging vehicle manufacturers to shift their production towards electric vehicles.

A minimum EPC rating in order to sell a home could also be required, provided that it is accompanied by adequate financial support to carry out the necessary retrofits, particularly for low-income households. Costs for households could be minimised if the government introduced this regulation with a long lead-in time.

Given the scale of the challenge to decarbonise the UK’s housing stock, scrapping its flagship home improvements scheme is an odd move for the government, particularly in the year it is hosting the major international climate change conference Cop26. Long-term support for home improvements and energy efficiency is vital to delivering net-zero, and a well-designed successor scheme to fill the void left by the Green Homes Grant is needed. For now, policymakers and industry alike will eagerly await the forthcoming Heat and Buildings Strategy, where we would hope to learn more about how the government intends to fill that void.

Patrick Hall is a Senior Researcher at the think tank Bright Blue

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