Twenty-Seventh Report - Green Homes Grant Voucher Scheme

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, … Read more 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delays to applications being processed, and by August 2021, 52% of voucher applications were eventually rejected or withdrawn, while 46% of installer applications failed.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. Show less

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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 … Read more 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. Show less

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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. … Read more 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 Show less

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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 …

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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, …

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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 …

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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 …

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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 …

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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 …

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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. …

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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 …

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