Scrapping of the Green homes grant scheme

The Green Homes Grant appeared to be the ideal opportunity to link the governments levelling up and net-zero objectives with the potential to create 100,000 skilled jobs and decarbonize the UKs draughty housing stock. It was planned as a short-term stimulus, with grants of up to £5,000 or £10,000 available to households to install low-carbon heating and insulation until March 2022. Despite this, the UK government scrapped the Green homes grant scheme at the end of the last month, a year ahead of schedule, with little explanation.

1. Reasons for failure of Green homes grant scheme
2. What steps the UK government should take in the near future

Reasons for failure of Green Homes Grant Scheme (GHGS)

1. The Green Homes Grant faced problems since its launch. The homeowners reported issues pertaining to the application process, builders complained of excessive red tape, tradespeople reportedly being left out of pocket for completed work and administrators being slow to distribute vouchers.
2. By the end of February, there had been more than 123,000 applications for the grant, but only 28,000 vouchers had been issued and only 5,800 energy efficiency measures were installed. In February, the reports circulated that the government might announce the winding down of the scheme. But having survived the Budget, the government announced that they would scrap the voucher scheme at the end of March.
3. In March, an EAC report criticised the government’s delivery of Green Homes Grant regarding the poor implementation of the scheme administration as it appears short of disastrous.
4. According to the EAC report, the scheme only achieved 10% of its target of improving 600,000 homes in six months and was hampered by issues faced by businesses in ramping up their supply chains, as well as the shortage of skills in the trained installers for green retrofits.
5. According to The Guardian, another major criticism of the scheme was that some installers had yet to be paid for their work on the grant by ICF, the American firm awarded the contract for the Green Homes Grant. MCS reported that some companies were owed up to £20,000 and estimated that it took 40 days on an average to pay installers, many of whom are small businesses with a maximum staff of 20 members.
6. The system was far too bureaucratic, expensive, and time-consuming for the vast majority of roofing contractors to afford.

Also See: Covid 19 Recovery Loan Scheme for Businesses

What steps the UK government should take in the near future?

1. With the Green Homes Grant scrapped from the housing policy landscape, questions about its replacement are understandably raised. Taking lessons from the Green Homes Grants failure, any new home improvement programme should provide long-term, consistent financial assistance and incentives to encourage private retrofitting while also sending a clear message to businesses and their supply chains.
2. UK Government could also introduce low interest ‘Help to Improve’ loans to assist in financing home improvements and energy efficiency retrofits.
3. There should also be regulatory safeguards. Setting a deadline for the sale of carbon-intensive home heating equipment, such as fossil-fuel boilers, could be one of the ways to ensure a transition to low-carbon heating.
4. A minimum EPC rating could also be required in order to sell a home, accompanied by adequate financial assistance to carry out the necessary retrofits, especially to low-income households. Household costs could be reduced if the government implements this regulation with a long lead-in time.
5. To achieve net-zero energy, long-term assistance for home improvements and energy efficiency is required, and a well-designed successor programme to fill the space after scrapping of the green house grant scheme.
6. A stamp duty rebate should also be proposed for new homes that can achieve EPC C status within two years, as well as an exemption for the most energy-efficient new homes. It should also provide a VAT reduction on our nine million traditional and heritage properties. This would help develop a highly qualified workforce and stimulate the most cutting-edge retrofitting solutions.

In case you have any query or want specialist advice on the "Green Homes Grant Scheme”, kindly call us on 03330886686, or you can also e-mail us at enquiry@dnsaccountants.co.uk

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.