Lessons learnt from the Green Deal Home Improvement Fund

The latest announcement of the Green Homes Grant scheme, with vouchers of up to £5000 for homeowners to spend on energy efficiency measures [1], is strongly reminiscent of the Green Deal Home Improvement Fund (GDHIF). Back in 2014 the GDHIF offered vouchers up to £7,600 per home for measures from a menu of insulation and heating improvements. It was massively popular and sold out in 7 weeks [2]. Unfortunately there was little lasting impact for the industry as insulation rates quickly dropped back to their former levels - as you can see in this chart.

Based on National Energy Efficiency Statistics from [3]

There were many other shortcomings too including:

• Short timescales to spend the voucher did not allow for inclement weather - it is impossible to do a good job with external wall insulation in a rainy January.
• Only Green Deal certified installers could take part, and qualification cost time and money, which shut out many small builders who could not afford the investment.
• The certification scheme was not adequate to protect consumers from rogue traders. In particular, any companies that failed an audit could resurface with another name and get new certification from a different body [4].

Since that time there has been growing acknowledgement of the need for a whole house approach to retrofit, rather than a measure-delivery based scheme. The Each Home Counts report got the ball rolling and now we have started to certify Retrofit Co-ordinators, whose role is to oversee a plan for each case. The goal is to avert unintended consequences from inappropriate measures or combinations of measures. These measures are part of the recently approved PAS 2035 standard and trust mark. At the moment it is voluntary except for government projects - maybe this is a good time to roll it out.

Here are some more suggestions from me:

Start small but keep it going

There is an immediate need to stimulate the sector and create jobs but they need to last. The stated aim is to upgrade 600,000 homes but there are 8 million homes with solid walls lacking insulation [4]. Too rapid growth attracts rogue entrepreneurs. We need established responsible traders to ramp up at a sustainable pace.

Start with the house, not the measures and make a plan

Under the GDHIF, homeowners could select from a menu of measures such as loft insulation, new glazing, boiler upgrade etc. However, if we have learnt anything since then it must be the need for a whole house approach. If anything is done to the fabric (with the possible exception of basics such as loft insulation), then the whole house should be considered and a plan agreed. Then items from the plan can be implemented as and when convenient. For example if you are going to upgrade windows and install insulation, do them at the same time or do the windows first - otherwise there will be extra work to fix up the insulation after doing the windows. Consider if insulation it likely to cause problems with moisture management and if so ensure there is ventilation installed first (or go for a different insulation system).

Avoid immediate carbon savings that continue to rely on heating with fossil fuels.

It is reasonable to give boiler upgrades to fuel poor households, but in general, we should avoid installing measures that rely on heating with fossil fuels, especially those with marginal savings like flue gas heat recovery.

Target a zero carbon pathway, not immediate savings

On the surface it makes sense to restrict funding to measures that make carbon savings. However, it can be more useful to install measures such as underfloor heating that do not bring immediate savings but will earn dividends later on when you install a heat pump, or similar system.

Reduce the financial risk for householders by reducing stamp duty on energy efficient homes

Even with grant support, payback times for some of these measures (especially solid wall insulation) could be 5 years or more. Many people are not sure if they will stay in their house that long. There are other benefits, improved comfort and health among them, but also considerable costs in time and hassle as well as money, and uncertain fuel savings - it is incredibly hard to predict savings reliably. If you do move, you may benefit from having increased the value of our house - or maybe not depending on where you live and the state of the market at the time. One thing the government can do to reduce the financial risk for home owners is to give stamp duty relief. This naturally leads to an increase in value for the house. There have been calls for this since at least 2016 [5].

We don't know much about the new scheme yet and it will not be actually launched until September. That gives some time for the detailed plans to be done right, bringing last good effects. 

[1]

Homeowners to receive £5,000 vouchers to improve energy efficiency (Money saving Expert) July 2020

[2]

Get up to £7,600 From the Green Deal Home Improvement Fund (Green Business Watch) 2014

[3] Household Energy Efficiency Detailed Report (www.gov.uk) 2019

[4] Research into quality assurance in energy efficiencyand low carbon schemes in the domestic market (Pye Tait Consulting for Citizens Advice Bureau) 2015

[5] Report calls for lower stamp duty on energy efficient homes (Guardian) 2016