Cuts to Green Homes Grant would hit consumers, business and Net Zero target: will Rishi Sunak take the crown for ‘worst energy decision’ for business?

Premature closure of the Green Homes Grant Scheme would put jobs in jeopardy, dash the dreams of homeowners and put the UK’s Net Zero target at significant risk, say 19 organisations in the energy efficiency and low carbon heating sector.

Their fears that their investment in the supply chain and upskilling staff will be wasted, recall the effect on many businesses who had invested in fulfilling the government’s long-planned ‘zero carbon homes’ policy. Disrupting that well-defined trajectory by cancelling the target in a so-called ‘bonfire of red tape’ was described as the UK’s ‘most damaging energy decision’ for businesses.

The groups have written to government ministers, highlighting the importance of the continued and successful delivery of the Green Homes Grant Voucher Scheme .

The Green Homes Grant was announced by the Chancellor, Rt Hon Rishi Sunak in July 2020 with the intention of kickstarting a green recovery, creating jobs and enabling homeowners to improve the energy efficiency of their homes. The initiative has been met with high demand from homeowners and industry, and while initial teething problems due to administration challenges have been significant, it is promising to see these issues now being resolved.

Fears that this week’s budget will include an early close to the scheme on 31 March  and recall of £320 million of the funding will hit  businesses who have invested in developing capacity to meet the demands of the scheme, the groups say. It will also undermine the trust of homeowners who have applied for vouchers for home improvements yet to be delivered.

Derek Horrocks, chair of the National Insulation Association, said: “Stable policy is needed to provide the industry with the confidence it needs to invest and adapt to the demands of the net zero transition. Enquiries for insulation and low carbon heating have been extremely high, in spite of the current circumstances, and companies across the sector have responded and geared up the supply chain to meet demand.

“That’s why we would urge the Chancellor not to curtail the Green Homes Grant to ensure that our sector can lead the UK’s economic recovery and meet the government’s net zero ambitions.”

Signatories to the letter include:

The Association for Decentralised Energy (ADE), Heat Pump Association (HPA), The Insulated Render and Cladding Association (INCA), Insulated Assurance Authority (IAA), Microgeneration Certification Scheme (MCS), National Insulation Association (NIA), Association for Renewable Energy and Clean Technology (REA), Renewable Energy Assurance Ltd (REAL), Solar Energy UK, Sustainable Energy Association (SEA), Solid Wall Insulation Guarantee Agency (SWIGA), Caplor Energy, Interglow, Insta Group, Pacifica Group, Permarock, Saving Energy UK, Sustainable Building Services and Westville Group.

Meanwhile other organisations have sounded warnings over the loss of the scheme.

John Alker, Director of Policy and Places, UKGBC: “The government were very clear that the £320M announced in last November’s Spending Review was additional to the originally allocated £2B.  The problems with the scheme have not been about consumer appetite, but with the scheme’s administration, with householders having to wait months in some cases and installers having to wait similar amounts of time to get paid for works done. Stop-start policy of this kind is extremely counter-productive for businesses looking to invest in delivering a green recovery, and it is disappointing to see that lessons that should have been learned from the fate of previous schemes appear to have been missed.

“Tackling the retrofit challenge will be essential if we are to meet our zero carbon targets, and central government policy in this area has been long overdue. If the government is to get progress in this area back on track, then it must look to adopt a national retrofit strategy and overhaul the Green Homes Grant so that it can ensure a long-term future for the retrofit industry and deliver for consumers.”

Phil Hurley, Chair, Heat Pump Association, said: “The Heat Pump Association is disappointed to see that unspent funding for the Green Homes Grant looks unlikely to be rolled over despite significant delays caused by the scheme’s administration rather than demand. This rollover would have demonstrated the government’s commitment to improving UK homes through energy efficiency and low carbon heat and given the industry the time and confidence it needs to deliver the green recovery.” The HPA said it was concerned that the decision to roll back funding will discourage heating installers from training or upskilling so they can install technologies like heat pumps, at a time when the industry needs to prepare for net zero. The Government’s target of 600,000 heat pumps per year could fail without a significant boost in installer numbers over the next decade. The decision not to roll over the funding will also send the wrong signal to households who have demonstrated their interest in improvements by applying for Green Homes Grant vouchers.

George Webb, chief executive, Liquid Gas UK, said: “The Government has fallen at the first hurdle of trying to tackle net-zero in the millions of homes around the UK. At its heart, the scheme misunderstood homeowners and people’s lives. The boxing in of homeowners into a small set of options such as heat pumps did not tally with the realities of the way of life for millions and what they can afford. Forcing homeowners to select one primary and expensive improvement has prevented homeowners from carrying out realistic measures such as double glazing or draught-proofing. A one size fits all approach clearly doesn’t work, so UK Government must accept this when designing future schemes. There must be support for a mix of technologies, including options such as LPG and less intrusive energy efficiency measures, so that rural households and small businesses can all play their part in reducing their carbon footprint.”

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