Select committee inquiry
Green homes grant voucher programme
Closed
What the inquiry looked at
“In July 2020, the government allocated £3 billion to reduce carbon emissions from current heating systems in 600,000 homes and public buildings. This included £1.5 billion to help property owners cover the cost of installing energy efficient measures, such as insulation or renewable heat systems. The Department for Business, Energy and Industrial Strategy (the Department) contracted with a digital services company to develop an IT platform so people could apply for Green Homes Grant vouchers. In Spring 2021 it was reported that only a small proportion of the vouchers had been allocated. The Committee will question senior officials at BEIS on the Green Home Grant’s design and objectives ; the procurement of the contract for the Green Home Grant IT platform; and how the Green Home Grant has been managed and what has been achieved to date. If you have evidence on these questions, please submit it here by 6pm on Thursday 16 September 2021.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
In the committee's words, from the summary of Twenty-Seventh Report - Green Homes Grant Voucher Scheme ↗
The Green Homes Grant Voucher Scheme (the Scheme) underperformed badly, upgrading around 47,500 homes compared to the 600,000 originally envisaged, delivering a small fraction of the expected jobs and accounting for just £314 million out of the original £1.5 billion budget. Administration costs are likely to amount to more than £1,000 per home upgraded, totalling just over £50 million in all.
We are not convinced that the Department has fully acknowledged the scale of its failures with this scheme. The failure to deliver this scheme continues government’s troubled record of energy efficiency initiatives and risks damaging the Department’s future efforts to harness both consumer and industry action to deliver Government’s net zero commitments. The Scheme was implemented as an urgent response to the COVID-19 crisis, aiming to support jobs at a time of significant risk for the economy while also reducing carbon emissions from homes. Despite these commendable intentions, the 12-week timescale to implement the Scheme was unrealistic and imposed constraints on its design and implementation. The Department proceeded with the Scheme despite its own Projects and Investment Committee rejecting its full business case. The Department should have considered halting or delaying the Scheme given evidence that preparations were not sufficiently progressed.
What resulted was a scheme with poor design and troubled implementation - the Department did not consult meaningfully enough with industry and consumers, leading to an overly complex scheme design with poor customer experiences and a lower uptake than envisaged. By August 2021, 52% of homeowners’ voucher applications were rejected or withdrawn, and 46% of installer applications failed. The Scheme also struggled due to the failure of its scheme administration contractor, ICF Consulting Services Ltd (ICF), to successfully implement the required digital voucher application system. The Department acknowledged that it should have had a better technical understanding of the preferred bidder’s proposed solution, and that, had it done so, it may have had sufficient warning that ICF would be unable to implement the required system successfully. The Scheme’s primary aim was to support jobs, however, the Scheme’s design and duration limited its impact on employment, and its abrupt closure may have in fact led to redundancies. Government needs to stick to a stable, long-term plan, to renew the confidence of industry and consumers in taking the actions needed to realise Government’s net zero ambitions.
It is a matter of concern that green homes schemes have repeatedly been short term and have underdelivered on over optimistic promises on green targets and job creation. The department needs to consider carefully how to approach such schemes in future.
What the government said
The government responded on 1 March 2022. The deadline was 1 February 2022.
Summary written by Accountability Index from the government's response.
The government states that it agrees with each of the Committee's six recommendations on the Green Homes Grant Voucher Scheme, giving target implementation dates for some and describing others as already implemented.
- On regaining consumer and industry confidence, the government agrees and says the BEIS Outcome Delivery Plan "will include trajectories for heat pump deployment and the improvement in EPC ratings for homes", showing what has been achieved and what remains to be done.
- On the scheme's implementation timescale, the government agrees, but explains that a ministerial direction "was not considered to be required in this case", and says an external review will consider the department's Tier 1 Governance structures in 2022.
- On scheme design, the government agrees and recognises that the shortened timescale affected engagement with consumers and installers. It says that for each proposed policy development it "aims to undertake robust public consultation".
- On the Boiler Upgrade Scheme, the government agrees (target implementation date: Winter 2023) and says it will establish a Green Jobs Delivery Group, a commitment in the Net Zero Strategy.
Read the government's response ↗ Read the report ↗ Report an error
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 6 September 2021 to its close on 1 March 2022. The dashed mark is the deadline Parliament records for the government's response.
- Oral evidence 20 Sep 2021
- Report 1 Dec 2021
- Government response 1 Mar 2022
What it recommended 10 recommendations · 19 conclusions
2Despite clear warning signs, the Department proceeded with an unrealistic implementation timescale for the Green...
Recommended (the committee's words)
Despite clear warning signs, the Department proceeded with an unrealistic implementation timescale for the Green Homes Grant Voucher Scheme. The Department had twelve weeks to set up the Scheme from announcement to launch. It was confident this was possible based on previous schemes, and felt the pace was necessary due to the need to boost jobs at a time of economic risk and to start installations before winter. However, this limited timeframe put immense constraints on design, consultation and procurement, at a time when the Department’s own delivery capacity in terms of personnel and skills was under strain as it responded to the impact of Covid-19, for example supporting vaccine procurement, the various business loan schemes, as well as its other building decarbonisation schemes. This Committee has previously highlighted that Government should be willing to halt schemes when they are not ready for implementation. However, here the Department 6 Green Homes Grant Voucher Scheme proceeded despite its own assessment, and that of the Infrastructure and Projects Authority, that the Scheme was high risk, and after its Projects and Investment Committee rejected the Scheme’s Full Business Case just prior to launch. The Accounting Officer’s decision to proceed was partly due to reasoning the Scheme would likely achieve value for money even if it did not spend its full budget. We question whether this justification was sufficient, given Managing Public Money principles require consideration of a programme’s feasibility, as well as its potential value for money. Recommendation: The Department should: • set out how it will improve its approach to testing and assuring the readiness of new programmes; and • where the Department is unable to take these actions, consider requesting a Ministerial Direction, bearing in mind its obligations under Managing Public Money to have regard for the feasibility of what is being proposed.
3The Scheme’s design was overly complex and did not sufficiently address the needs of consumers...
Recommended (the committee's words)
The Scheme’s design was overly complex and did not sufficiently address the needs of consumers and installers. The Department acknowledges that consumers and installers faced a poor customer experience when using the Scheme. There were delays to applications being processed, and by August 2021, 52% of voucher applications were eventually rejected or withdrawn, while 46% of installer applications failed. These high attrition rates were substantially the result of the Scheme’s complex design, with applications having to meet complicated requirements to be approved. Homeowners also struggled to find registered installers as many installers were unwilling to gain the necessary certification for a scheme lasting only six months. The Department should have consulted more deeply to understand the challenges that consumers and industry would face, and how it might address barriers to participation. The final administration costs are expected to be just over £50 million, 16% of the total Scheme spend, amounting to more than £1,000 per home upgraded. The Department states that these high costs were due to the need to account for the failings of the Scheme administrator, even though this figure includes a reduction of the contractor’s fee for their poor performance. A scheme of less complexity would have had administration costs more proportionate to the number of successful voucher applications. Recommendation: The Department should set out what steps it is taking to: • secure meaningful engagement with potential consumers in the design of new programmes and minimise the risk that the scheme design proves to be unworkable; • ensure that the costs of administration are proportionate to the delivery of outcomes and the amount of public money at stake.
4The creation of jobs was a priority for the Scheme, but the Department failed to...
Recommended (the committee's words)
The creation of jobs was a priority for the Scheme, but the Department failed to maximise its impact on employment. The Scheme’s objectives of creating jobs and reducing carbon emissions were at times conflicting. The Department chose to prioritise measures under the Scheme which promised higher carbon savings. However, this limited the number of jobs that could be created, as often energy Green Homes Grant Voucher Scheme 7 efficiency measures which required skills that were quicker for installers to recruit and train, or where there were larger supply chains, were not as accessible under the Scheme. Heat Pump installations, for example, were encouraged under the six- month Scheme but it can take much longer than that just to learn how to install them. The Department originally envisaged that the Scheme would support up to 82,500 jobs over 6 months, but its modelling now indicates that the Scheme will have supported 5,600 jobs over 12 months. We are sceptical whether these modelled figures are accurate, as they are not based on concrete evidence of the actual number of jobs supported, and also do not take into account the negative effects reported by installers from the Scheme’s sudden closure. The Department is confident that installers were able to find work through its other energy efficiency schemes once the Scheme closed, however evidence submitted by industry indicates that these schemes were often not accessible to smaller installation companies, and some firms had to make staff redundant as a result of the Scheme’s difficulties and its abrupt closure. Recommendations: In planning and implementing the new Boiler Upgrade Scheme, the Department should engage closely with potential suppliers to properly understand the challenges they may face to scale up, including training sufficient numbers of appropriately skilled workers, and ensure the availability of suppliers across the country. If the Department sets an objective to create jobs it should put in place rob
5The Department appointed a contractor without properly understanding whether it could deliver.
Recommended (the committee's words)
The Department appointed a contractor without properly understanding whether it could deliver. The Department undertook a rapid procurement for a grant administrator, who would develop a digital voucher application system for the Scheme. None of the bidders for the contract thought it was possible to fully implement a digital system in time for the launch, and so the Department launched a complex scheme without an IT platform that had been fully developed and tested. The Department’s chosen grant administrator, ICF Consulting Services Ltd (ICF), subsequently struggled to implement the voucher application system, leading to greater amounts of manual processing being needed for applications, contributing to the delays in processing vouchers. The Department felt its procurement process was run successfully overall, despite appointing a contractor which could not deliver the system it wanted. Whereas other bidders thought fully implementing a system would take at least 15 weeks, ICF thought it could do it in six and a half weeks. It was unclear why the Department did not challenge ICF further as to why it felt it could deliver substantially faster than the other bidders. The Department recognised it should have had a better technical understanding of ICF’s proposed digital solution, which could have prevented some of the issues experienced subsequently. This was despite a specialist Cabinet Office review of the low-cost bid recommending the Department obtain a more detailed understanding of the proposed solution, which the Department did not do. 8 Green Homes Grant Voucher Scheme Recommendation: In its Treasury Minute response, the Department should set out how it will improve the technical scrutiny of bids during its procurements, to better assure the capability of suppliers and the practical feasibility of their proposals, particularly where a bidder is promising considerably more than others.
6The Department has persistently failed to learn lessons from previous energy efficiency schemes.
Recommended (the committee's words)
The Department has persistently failed to learn lessons from previous energy efficiency schemes. The Committee has seen a number of domestic energy efficiency schemes which have failed to achieve their ambitions, including the Green Deal and the Renewable Heat Incentive. These both featured poor uptake by consumers due to their complex scheme design, and the Green Deal scheme also carried a disproportionately high administrative cost per home upgraded. The Department stated that the design of the Green Homes Grant Voucher Scheme did reflect lessons from previous schemes, particularly in its attempt to ensure value for money in delivering carbon impacts whilst minimising poor quality workmanship and fraud. Nonetheless, we are concerned that despite the Department retaining personnel with experience of previous initiatives, the Green Homes Grant Voucher Scheme suffered from many of the same issues that we have seen before. This calls into question how the Department maintains and uses its corporate memory, and whether it is truly learning lessons from the delivery of these schemes. Recommendation: The Department should set out in its Treasury Minute response how it is embedding lessons learned from this scheme and previous schemes, and how it will ensure these are applied to future energy efficiency initiatives. Green Homes Grant Voucher Scheme 9 1 Scheme design and performance
1On the basis of a report by the Comptroller and Auditor General, we took evidence...
Concluded (the committee's words)
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department of Business, Energy and Industrial Strategy (the Department) about the Green Homes Grant Voucher Scheme. The government aims to achieve net zero carbon emissions by 2050. Buildings account for around 19% of all UK greenhouse gas emissions.1 To reduce emissions from homes the government wants consumers to use less energy, make greater use of green heating systems (alternatives to gas and fossil fuels) and for home heating to be more efficient. The Department has overall responsibility across government for achieving net zero, and it and its predecessor, the Department for Energy and Climate Change, have been responsible for a number of home energy efficiency schemes, such as the Green Deal, the Energy Company Obligation, the Renewable Heat Incentive and the Warm Front Scheme. These schemes have addressed different groups of energy consumers, over different periods of time.2
7These issues were further exacerbated by underperformance of the Scheme Administrator (ICF Consulting Services Ltd,...
Concluded (the committee's words)
These issues were further exacerbated by underperformance of the Scheme Administrator (ICF Consulting Services Ltd, a contractor appointed by the Department), creating delays in applications being processed and vouchers issued to homeowners, as well as in making payments to installers, leaving them without payment for completed work for significant periods of time.16 The Department argued that this was the primary reason for the scheme’s poor performance, and that it had seen a lot of demand at the start of the scheme before these customer service issues arose.17 It also stated that some of the application complexity arose from the failure of the Scheme Administrator to implement a digital voucher application system, meaning that customers had to be asked for documentation for checks instead of these being automated.18
8Despite spending a fraction of what was intended on vouchers, the Department expects it will...
Concluded (the committee's words)
Despite spending a fraction of what was intended on vouchers, the Department expects it will incur costs of £50.5 million in administering the Scheme, equating to about £1,000 for every home it will upgrade.19 The Department stated that this was a result of having to address the failings of the Scheme Administrator, and that these costs should instead be compared to the 169,000 voucher applications as the Department incurred costs on each of these due to the administrator’s failure to automate processing. This is 9 C&AG’s report para 8, Qq 29, 33 10 C&AG’s report, Figure 5 11 C&AG’s report, paras 8 and 2.11 12 Q64 13 Q88 14 Q64 15 MCS Certified and MCS Foundation, page 4 16 Q52, MCS Certified and MCS Foundation page 6 17 Qq 29, 41 18 Q63 19 Q147 Green Homes Grant Voucher Scheme 11 despite also stating that it had secured a reduction in the Scheme administrator’s fee due to their underperformance.20 These costs would have been more proportionate had the Scheme not been so difficult for homeowners to engage with; the Scheme’s 52% attrition rate of failed applications compares unfavourably to the Department’s initial expected attrition rate of 40% based on previous schemes, which we note also faced problems due to over-complexity.21 Had the Department created a scheme that was more accessible, there would have been a greater number of homes upgraded for the resources committed.22 Impact on Industry
9The Scheme encouraged the installation of primary measures which would produce the greatest carbon savings,...
Concluded (the committee's words)
The Scheme encouraged the installation of primary measures which would produce the greatest carbon savings, and which homeowners would be less likely to install without the support of a grant. However, over the short six-month duration of the Scheme, this created a tension with its objective to create jobs.23 This short duration was to encourage homeowners to take advantage of the scheme quickly, however, primary measures often required specialist skills that were difficult to recruit or train or were in supply chains which were not as able to scale up to meet increased demand.24 For example, whilst heat pumps were one of the measures encouraged by the Scheme, it can take as long as 48 months to learn how to install one.25
10Industry associations stated that the short lead up time, and the Scheme’s six-month window was...
Concluded (the committee's words)
Industry associations stated that the short lead up time, and the Scheme’s six-month window was a challenge for many installers, providing a very short timeframe for them to identify the resources they needed to engage with the scheme, as well as for the installation of measures.26 The Department acknowledged that delivering the intended £1.5 billion of funding was extremely ambitious, and that it could have driven greater job creation by broadening the constraints on measures, however, it wanted to ensure that the scheme was not poor value for money in delivering carbon impacts.27 It also argued that many of the primary measures were labour intensive and stimulating demand for them would also have an impact in supporting jobs, and that where specialist skills were needed firms could hire new staff to work alongside those who were more experienced.28
11Requiring PAS and MCS certification, alongside Trustmark registration, was intended to protect homeowners from poor...
Concluded (the committee's words)
Requiring PAS and MCS certification, alongside Trustmark registration, was intended to protect homeowners from poor quality workmanship and fraud.29 However, gaining these certifications requires investment and time, which many installers were unwilling to do for only a 6-month scheme.30 At the Scheme’s launch, there were 880 potential installers registered with Trustmark, however, by November 2020 only 248 had registered to participate in the Scheme, eventually growing to 1,008 by August 2021.31 Many homeowners struggled to find installers who were willing to participate in the Scheme, and the Department acknowledged that in many areas there were not enough 20 Qq136, 138–142, 154–155, Note dated 1 October 2021 from Department for Business Energy and Industrial Strategy section 2–4 21 Qq 91, 99 22 Q103 23 Qq 39–40 24 C&AG’s report, paras 10–11 25 Q35 26 The Mineral Wool Insulation Manufacturers Association, page 2, MCS Certified and MCS Foundation, page 4–5 27 Qq 40, 42, 64 28 Qq 35, 41 29 Q60, 63 30 Q85 31 C&AG’s Report, paras 8, 2.11 12 Green Homes Grant Voucher Scheme installers.32 Despite the challenges, some businesses did invest in order to participate; a survey by the Insulation Assurance Authority found that those who did invest spent an average of £87,000 getting set up for the scheme by gaining the necessary certifications, hiring staff, and promoting the scheme.33 Subsequent issues with the administration of the Scheme, however, such as the delays in issuing vouchers and making payments, meant that rather than expanding some firms reported having to lay off workers.34
12Whilst the Department extended the scheme’s duration by 12 months in November 2020, it later...
Concluded (the committee's words)
Whilst the Department extended the scheme’s duration by 12 months in November 2020, it later let these businesses down when on 27 March 2021 it suddenly announced the Scheme would close at the end of 31 March 2021.35 This abrupt cancellation itself had negative impacts on the companies who invested in the scheme. For instance, the Federation of Master Builders reported loss of time and money, redundancies of staff hired to meet demand from the scheme, and reputational damage through being unable to service all their customers in the limited time available. It also stated that maintaining PAS certification requires continuous work, and thus the closure of the Scheme risked the loss of capacity in the industry.36
13The Department acknowledged that the impact on many installers was less than ideal, however, it...
Concluded (the committee's words)
The Department acknowledged that the impact on many installers was less than ideal, however, it stated that the alternative was to continue running an unacceptable standard of service.37 It also argued that installers would be able to access the other building decarbonisation schemes it had launched in July 2020, such as the Local Authority Delivery element of the Green Homes Grant scheme and the Social Housing Decarbonisation Fund Demonstrator, which were delivered through local authorities as an intermediary.38 This contradicted evidence from industry, who stated that local authorities had tended to deal with just larger suppliers, and SMEs were either unable to engage with the schemes or would at least struggle to engage quickly.39
14These factors point to the Scheme’s underperformance on jobs; the Department initially anticipated the scheme...
Concluded (the committee's words)
These factors point to the Scheme’s underperformance on jobs; the Department initially anticipated the scheme would support up to 82,500 jobs over 6 months, however, it now forecasts that it will support only 5,600 jobs over 12 months.40 The Department’s estimates are based on economic modelling that calculates the likely number of jobs based on the amount spent, rather than on concrete evidence of the actual number of jobs supported, and would not take into account the negative effects that businesses reported from the Scheme’s difficulties and subsequent closure.
15Considering these difficulties, it comes as no surprise that industry criticised the design of the...
Recommended (the committee's words)
Considering these difficulties, it comes as no surprise that industry criticised the design of the Scheme, and recommended greater consultation for future ones.41 The Department stated that whilst it did engage with industry before the Scheme’s launch, it was limited in what it was able to do until the formal fiscal announcement was made on 8 July.42 After this point, the Department had limited time until the Scheme’s launch 32 Q86 33 Mineral Wool Insulation Manufacturers Association, page 1 34 Mineral Wool Insulation Manufacturers Association, page 2 35 Qq 69–70 36 Q69, Federation of Master Builders, page 2 37 Qq 65–69 38 Q66, Q69–70 39 Federation of Master Builders, page 2, E3G, page 4 40 C&AG’s report, para 7 41 Federation of Master Builders, page 1, Mineral Wool Insulation Manufacturers Association, page 1, Solar Energy UK, page 4, MCS Certified and MCS Foundation page 8 42 Q83 Green Homes Grant Voucher Scheme 13 at the end of September to fully engage with industry.43 However, it is unclear why the Department, which would presumably be in regular contact with industry anyway, was so lacking in an awareness of the complexities of the industry, and its actual capability to scale up over a short period.44 This is also despite previous recommendations from this Committee to ensure that policy decisions are thoroughly tested and based on accurate evidence that includes a robust evaluation of stakeholders’ views.45
16In our recent evidence session on Achieving Net Zero Strategy, the Department set out its...
Concluded (the committee's words)
In our recent evidence session on Achieving Net Zero Strategy, the Department set out its intention to introduce a Boiler Upgrade Scheme to support the transition of heating from gas boilers to heat pumps, which it hopes will support jobs and develop the heat pump supply chain. The Department told us it has engaged with industry and understands that industry is confident it can scale up to meet the Department’s ambitions for heat pump installations as part of its longer-term Heat and Buildings Strategy.46 Learning Lessons for future delivery
17In 2016 our predecessors on the Committee identified similar problems when they examined the Green...
Concluded (the committee's words)
In 2016 our predecessors on the Committee identified similar problems when they examined the Green Deal; in that case the former Department for Energy and Climate did not undertake enough work to understand consumer needs, and how to make it easier for them to apply. This resulted in an overly complex scheme with many process steps and excessive paperwork, resulting in extremely low demand; only 14,000 households took out a loan, leading to a cost to taxpayers of £17,000 for every loan arranged.47 Similarly, in 2018 the Renewable Heat Incentive saw poor uptake; the Department expected to install 513,000 new heating systems as part of the scheme, but at the time anticipated it would install only 111,000. This was also due to a lack of preparation by the Department to understand what consumers wanted and the potential barriers to participation.48 The Warm Front Scheme featured a lack of clarity over whether it was primarily aimed at energy efficiency or alleviating fuel poverty.49
18The Department argued that it had learned lessons from previous schemes.50 The design of the...
Concluded (the committee's words)
The Department argued that it had learned lessons from previous schemes.50 The design of the Scheme was based on the Green Deal Home Improvement Fund – itself a voucher scheme launched in 2014 which saw rapid uptake by consumers, and which had also encouraged certain energy efficiency measures over others in a similar manner to the recent scheme.51 It also stated that the requirement for PAS and MCS certification and Trustmark registration were drawn from the Every Home Counts review, which set out recommendations for government in ensuring that homeowners were not at risk from poor quality work.52 Nonetheless, it is of concern that the Department did not fully 43 Qq 83–85 44 Q85 45 Q83, Committee of Public Accounts, Household energy efficiency measures, Eleventh Report of Session 2016–17, HC 125, July 2016 46 Committee of Public Accounts, Oral Evidence: Achieving Net Zero: Follow Up, HC 642, 25 October 2021, Qq 24, 27, 69 47 Committee of Public Accounts, Home Energy Efficiency Measures, Eleventh Report of Session 2016–17, HC 125, 11 July 2016 48 Committee of Public Accounts, Renewable Heat Incentive in Great Britain, Fortieth Report of Session 2017–19, HC 696, 16 May 2018 49 Committee of Public Accounts, The Warm Front Scheme, Thirty-Ninth Report of Session 2008–09, HC 350, 29 June 2009 50 Q63 51 Qq 31–32 52 Q94 14 Green Homes Grant Voucher Scheme learn from and overcome the issues of complexity and poor performance on the previous schemes.53 This is especially so given departmental staff with knowledge of these previous schemes were present during the development and implementation of the recent scheme, raising questions around how the Department maintains and uses its corporate memory.54
19We are likewise concerned that the Department will fail to learn from this scheme.
Recommended (the committee's words)
We are likewise concerned that the Department will fail to learn from this scheme. When asked what the primary failings of the Scheme were, whilst acknowledging the short duration and the design of the scheme as factors, the Department largely attributed its failings to the poor performance of its scheme administrator.55 This contrasted with one of the Department’s ministers who, giving evidence at the Environmental Audit Committee, readily acknowledged the multiple causes of the Scheme’s difficulties set out the Comptroller and Auditor General’s report.56 The Department needs to recognise the breadth and scale of what went wrong on this scheme, so that it can begin to regain the confidence of homeowners and industry in future attempts to decarbonise buildings.
20The Department’s previous energy efficiency schemes for private housing have operated in different ways, and...
Recommended (the committee's words)
The Department’s previous energy efficiency schemes for private housing have operated in different ways, and for varying timescales, and this fragmented, stop-go activity has hindered long term stable progress towards Government’s energy efficiency ambitions. In evidence to us industry associations argued the case for a stable, long-term plan for decarbonising the UK’s domestic buildings.57 In our evidence session on Achieving Net Zero the Department referred to its new Heat and Buildings Strategy, alongside the Net Zero Strategy, which sets out its plans, including spending intentions, and the longer- term regulatory path for the building retrofit sector.58 The strategy is intended to provide a stable long-term policy landscape for consumers and industry to engage with.59 53 Q105 54 Q164–167 55 Qq 29, 52, 158 56 Environmental Audit Committee, Oral Evidence: Mapping the Path to Net Zero, HC 497, 22 September 2021, Qq 170, 189 57 MCS Certified and MCS Foundation, page 8–9, Federation of Master Builders, page 3–5, Mineral Wool Insulation Manufacturers Association, page 2–4 58 Committee of Public Accounts, Oral Evidence: Achieving Net Zero: Follow Up, HC 642, 25 October 2021, Qq 53, 55 59 Qq 74, 77, 93, 127 Green Homes Grant Voucher Scheme 15 2 Scheme Implementation Unrealistic implementation timescales
21The Chancellor announced the Green Homes Grant Voucher Scheme (the Scheme) on the 8 July...
Concluded (the committee's words)
The Chancellor announced the Green Homes Grant Voucher Scheme (the Scheme) on the 8 July 2020, with the expectation that it would launch on 30 September 2020. This allowed just 12 weeks to get the scheme up and running. During this time, the Department had to consult with stakeholders, design the Scheme, and procure a scheme administrator to implement a digital system for voucher applications.60 This was at a time when the Department’s delivery capacity in terms of personnel and skills was already constrained in responding to the impact of Covid-19, for example with supporting vaccine procurement various business loan schemes, as well as its other building decarbonisation schemes.61
22The Department told us that it had a high-risk appetite in getting the scheme up...
Concluded (the committee's words)
The Department told us that it had a high-risk appetite in getting the scheme up and running due to the ongoing effects of the pandemic, and the short 12-week timescale was necessary to boost jobs as 60% of the construction industry were on the furlough scheme which was due to end. It argued that if it had pushed the launch back to November or December then the Scheme would have started in winter, when it is less practical to install energy efficiency measures.62 Despite the short timescales, the Department was confident that it was still possible to implement the Scheme due to its experience of setting up other energy efficiency schemes with similar timescales, such as the Green Deal Home Improvement Fund.63
23This rushed timescale meant that the Department undertook limited stakeholder engagement and restricted its options...
Concluded (the committee's words)
This rushed timescale meant that the Department undertook limited stakeholder engagement and restricted its options for procuring an administrator.64 The Department also did not pilot the scheme to test its feasibility.65 These issues led to many of the problems described in Part One including the lack of understanding installer needs, the complexity of the scheme and the performance of the administrator. The Department pressed on with its unrealistic timetable despite warning signs during implementation.66 Both the Department’s own assessment, and that of the Infrastructure and Projects Authority, showed that the Scheme was high risk.67 In addition, the Department’s Projects and Investment Committee rejected the Scheme’s Full Business Case two days prior to the Scheme launch date as it did not believe the full £1.5 billion would be spent and was not able to confirm the scheme administrator’s IT solution would function, as it had yet to be fully developed and tested.68
24In a previous Committee report Home Energy Efficiency Measures, our predecessors highlighted that Government “should...
Concluded (the committee's words)
In a previous Committee report Home Energy Efficiency Measures, our predecessors highlighted that Government “should be prepared to pull back on plans if it is clear they are unlikely to be successful and risk taxpayers’ money”.69 Given the risk to the Department’s reputation, we questioned why the Accounting Officer chose to proceed, rather than 60 C&AG’s Report, Figure 10 and paras 10, 13, 3.2 61 C&AG’s Report, para 3.4, Q30 62 Qq 30–32 63 Qq 30–32 64 Q83 and C&AG’s Report, paras 10, 13, 15 65 Qq 80–81 66 Q30 67 C&AG’s Report, para 13 68 C&AG’s Report, para 14 69 Committee of Public Accounts, Household energy efficiency measures, Eleventh Report of Session 2016–17, HC 125, July 2016 16 Green Homes Grant Voucher Scheme ask for a Ministerial Direction.70 The Accounting Officer told us that she recognised the concerns of the Projects and Investment Committee, but believed the Scheme was still likely to achieve value for money even if it did not spend its full budget. This was informed by the Department’s analysis of 16 scenarios of different levels of scheme demand and implementation costs, which said that in only one scenario of much higher costs and much lower demand did the scheme fail to provide net benefits. Her assessment also referenced assurance received from the Government Digital Service that the parts of the IT solution developed to that point were secure and reliable, and correspondence from HM Treasury stating that it would consider extending the Scheme’s funding into the next financial year should delivery risks materialise.71
25Under Managing Public Money principles, Accounting Officers should consider the regularity, propriety, and feasibility of...
Concluded (the committee's words)
Under Managing Public Money principles, Accounting Officers should consider the regularity, propriety, and feasibility of initiatives, as well as their potential value for money. In terms of feasibility, Accounting Officers should seek a direction “where there is a significant doubt about whether the proposal can be implemented accurately, sustainably, or to the intended timetable”.72 Given the warnings raised concerning the Scheme’s high level of risk, we question whether the Accounting Officer’s justification to proceed was sufficient. Grant administrator procurement
26Due to the 12-week timescale for implementing the Scheme, the Department had limited time to...
Concluded (the committee's words)
Due to the 12-week timescale for implementing the Scheme, the Department had limited time to procure a Scheme Administrator who would develop a digital voucher application system and process applications. The Department received three bids, but none of the bidders thought it was possible to fully implement a digital system in time for the launch. As a result, the Department allowed bidders to steadily deliver elements of the system in stages. Whereas other bidders thought fully implementing a system would take at least 15 weeks, ICF Consulting Services Ltd (ICF) thought it could do it in six and a half weeks and at lower cost.73
27As a result, the Department awarded the contract to ICF, accepting it’s accelerated timetable for...
Concluded (the committee's words)
As a result, the Department awarded the contract to ICF, accepting it’s accelerated timetable for completion, whilst also putting in place a manual processing facility as a contingency in case the timetable overran.74 ICF subsequently struggled to implement the required voucher application system, meaning that greater amounts of manual processing were needed for voucher applications. This contributed to the delays that homeowners and installers faced in engaging with the Scheme.75
28Despite the Department appointing a contractor which could not deliver the system, the Department felt...
Recommended (the committee's words)
Despite the Department appointing a contractor which could not deliver the system, the Department felt its procurement process was run successfully overall.76 In response to ICF’s proposed costs being far below the other two bidders, the Cabinet Office undertook a low-cost review of the scheme administrator’s bid during the procurement. Its review stated that the Department should undertake further technical assessment on 70 Qq 55–59 71 Qq 53–55, 58, Note dated 1 October 2021 from Department for Business Energy and Industrial Strategy paras 5–7 72 Managing Public Money, Box 3.2, p 16, Managing public money - GOV.UK (www.gov.uk) 73 C&AG’s Report, paras 16, 3.9, 3.12 74 Qq 62, 131–132, 137 75 Q145 76 Q144 Green Homes Grant Voucher Scheme 17 the scheme administrator’s proposed solution, which the Department did not undertake.77 The Department accepted that it should have carried out a deeper and more thorough technical assessment, and that this could have prevented some of the issues it experienced subsequently. However, at the time it felt it understood the reasons for ICF’s lower costs, which were related to its accelerated speed of implementation.78
29The Department stated that at the time of the procurement, it appeared that ICF had...
Recommended (the committee's words)
The Department stated that at the time of the procurement, it appeared that ICF had a ready-made system that had already been used on over 100 grant schemes in the US and Canada, and which could quickly and cheaply be amended to suit the Department’s needs.79 The Department did not follow up with any of the organisations contracting with ICF as it felt appropriate referencing would have been completed when ICF were qualified for the Crown Commercial Service framework it used for the procurement.80 However, given ICF were proposing to deliver substantially faster than the other bidders, the Department should have challenged ICF further as to why it felt it alone could do this. 77 C&AG’s Report, para 3.13, Qq 98, 133 78 Qq 98, 134, 144 79 Qq 62, 96–98, 136–137 80 Qq 159–162 18 Green Homes Grant Voucher Scheme
Evidence
Oral evidence sessions 1
- 20 Sep 2021Green homes grant voucher programme3 witnesses, listed belowparliament.uk ↗
Who gave evidence 3 witnesses
- Ben GoldingDirector, Clean Power 2030
- Sarah MunbyPermanent Secretary, Department for Business, Energy and Industrial Strategy
- Selvin BrownDirector for Net Zero Buildings: Domestic, Department for Energy Security and Net Zero