With the prime minister and business secretary reportedly considering developing another green homes retrofit programme, it is vital that they build on the lessons of previous flagship home energy efficiency policies, or risk repeating the same mistakes.
In particular, the government should look at the Green Deal (2013-15) and the current Green Homes Grant as examples of how not to design and implement green home policies. Despite obvious differences between them, the former being a loan scheme which enabled householders to borrow money for energy saving improvements and the latter offering grants to cover the bulk of improvements for homeowners, there are several striking similarities.
Both were introduced with high expectations. The then energy minister Greg Barker declared, in 2011, that the Green Deal was the centrepiece of the “largest and most ambitious home improvement programme since the second world war”, whilst the Green Homes Grant was positioned to spearhead the UK’s green economic response to the pandemic by creating 100,000 skilled jobs and improving the energy efficiency of 600,000 homes. Set against these expectations, both schemes have underperformed. The Green Deal achieved fewer than 20,000 home retrofits and, according to the National Audit Office, saved “negligible amounts of CO2”. The Green Homes Grant, meanwhile, has installed just 49,000 efficiency measures to date, saving a meagre 0.04 per cent of total residential sector emissions. The reasons, beyond poor performance, in both schemes are also broadly the same.
The administration needs to be more streamlined
Whilst the administrative issues associated with the Green Homes Grant are well documented, such as delays dispensing grant vouchers and making payments to contractors, it is perhaps surprising to learn that the now defunct Department of Energy and Climate Change “identified high administrative costs as an area to improve in a lessons learned exercise” from the Green Deal in 2015. These administrative costs, which included complex loan application processes and time-consuming requirements for suppliers to identify eligible households, discouraged householders and suppliers from participating in the scheme.
If the government is to develop and introduce a third successive green homes scheme, as is reported, it must learn from the administrative issues which have beset the Green Deal and Green Homes Grant and streamline the whole process to make it more accessible and user friendly.
Schemes have to be backed up by clear and consistent messaging
The key selling point of the Green Deal was the so-called ‘golden rule’, a stipulation that loan repayments must be lower than the total savings made on energy bills over a 25 year period. However, with interest rates offered at between seven to ten per cent, a rate considerably higher than the loans offered on the high street at the time, very few retrofitting measures met the Green Deal’s own golden rule, making the scheme simply unaffordable.
Inconsistent and unclear messaging has also severely hamstrung the Green Homes Grant. Short timescales, last minute extensions and funding cuts have undermined public and private confidence in the scheme. The announcement last month, for example, that unspent money originally earmarked for the scheme would not be rolled over into the 2021-22 financial year has reportedly resulted in 48,000 job losses across the North and the Midlands.
Taking these lessons forward, it is crucial that any future home energy improvement scheme has transparent and consistent messaging at its heart. Home occupiers, as indicated by the Climate Assembly UK, want reliable and clear information on home retrofits so they know exactly what to expect. Clear messaging can also help to grow confidence across the supply chain, allowing contractors to build up the capacity and skills to deliver on scale.
Long term strategy is essential
Administration and messaging aside, the main cause of underperformance in both schemes has been the absence of a long term strategy. In the case of the Green Deal, the Energy and Climate Change Committee in 2013 labelled it as “unacceptable” that the department did not set any objectives for its flagship policy, nor any clear success criteria to assess the scheme. The Green Homes Grant too, whilst only being introduced as a short term stimulus, was strategically flawed from the start by the delay of the Heat and Building Strategy which will outline the government’s plan to decarbonise the housing sector. The scheme was also run in a short window over the winter months when householders are inevitably going to be reluctant to install a whole new heating system.
To build on the Green Homes Grant and to make retrofit schemes a success, it is essential that the government develops a long term strategy on energy efficiency and heating. This must include new regulation on minimum energy efficiency housing standards so that all homes, under all forms of tenure, are rated EPC band C by 2030, and it should cut VAT on renovation and low carbon installations.
Almost all the UK’s 29 million homes require retrofitting for energy efficient and low carbon heat measures to be able to meet our legal carbon targets. Green home energy schemes are a chance to pull off a triple win on three big challenges: cutting carbon, improving public health and providing much needed skilled work across the country. But this can only be achieved if the government learns the hard lessons from past polices.