In March 2021, the UK stumbled on a significant hurdle in its commitment to achieve net-zero carbon emissions by 2050. The £1.5 billion Green Homes Grant (GHG), the government’s flagship scheme for insulation and heat pumps, had been scrapped just six months after its launch in September 2020. The abandonment of this scheme has since left so-called ‘able-to-pay’ households without an effective means of subsidising the decarbonisation of their homes, turning domestic heating into a question mark over the nation’s net-zero strategy.

What went wrong?

At surface level, the GHG appeared to be relatively simple. Homeowners and residential landlords could apply for up to two-thirds of the cost of home improvements worth £5,000, while fuel poor households could be eligible for up to £10,000 worth of vouchers. 

The aim here was to increase uptake of low carbon heat sources and insulation through generous subsidies and the scheme’s straightforward nature. However, the reality was anything but that.

Registration for the scheme was impeded by endless amounts of red tape, limiting initial uptake, while those that persisted with their application were only met with further challenges. 

Consumers reported extreme delays between applying for and receiving their voucher, and received conflicting advice as to what measures were included in the GHG’s scope. 

Engineers also complained of unnecessary bureaucracy, rendering installations – particularly of heat pumps – too complex to undertake, with the National Audit Office suggesting that administration costs were as high as £1,000 per household.

Initial government projections claimed that the scheme would benefit around 600,000 households, and create roughly 82,500 jobs. However, the latest statistics suggest a much lower figure. 113,738 households have applied for 169,012 vouchers, with a staggering 91,425 of these rejected, withdrawn, or expired. Of the 72,331 vouchers successfully issued, only 31,938 projects have been completed, while the government’s spending watchdog estimates that as few as 6,000 jobs have been created by the scheme.

Looking forward

The overwhelming failure of the GHG brings back memories of the coalition government’s 2013 Green Deal, which similarly flattered to deceive, ultimately harming consumer confidence in the government’s ability to facilitate the residential heating sector’s green transition. 

Despite the limited success of both schemes, subsidies will likely still prove essential to whatever decarbonisation strategy the UK government chooses to employ in the coming decades. For this reason, it is important to examine just why and how the GHG failed, now the dust has settled, in order to allow future initiatives to avoid the pitfalls it succumbed to.

Primarily, future schemes should be straightforward in both appearance and execution, rather than just the former. An overly complicated process can deter prospective applicants; it is therefore critical to make things as simple as possible. In this regard, the English government can learn a lot from Scotland’s Home Energy Efficiency Programmes for Scotland (HEEPS), which offers several distinct schemes with different scopes and aims, all presented in an accessible manner.

Moreover, impartial, tailored advice for consumers must be available – something also achieved by the HEEPS through partnership with the Energy Savings Trust. The number of schemes offered by HEEPS also allows homeowners to be flexible in their approach to decarbonisation, rather than ‘picking winners’ by pushing certain technologies. Perhaps most critically, future schemes should ensure that they value the role of the installer – who, as the most effective intermediary between Whitehall and homeowners, eclipse government as the most reliable source of advice.

Closing thoughts

While the GHG may appear to be an inarguable failure at first glance, by learning from its shortcomings and evaluating the successes of contemporary programmes like HEEPS, it may be used to fuel the success of future subsidy schemes. 

However, the UK government cannot afford to add another failed venture to a growing list of failures. Nevertheless, by avoiding the mistakes of the GHG, the government can ensure that the third time is indeed the charm for the residential subsidy scheme of the future.