Green Homes Grant Voucher Scheme — [Mr Laurence Robertson in the Chair]

– in Westminster Hall at 2:53 pm on 27th May 2021.

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[Mr Laurence Robertson in the Chair]

[Relevant documents: Third Report of the Environmental Audit Committee, Session 2019–21, Energy efficiency of existing homes, HC 346, and the Government response, HC 135; Oral evidence taken before the Business, Energy and Industrial Strategy Committee on 9 February, 16 March and 20 April 2021, on Decarbonising heat in homes, HC 851; Written evidence to the Business, Energy and Industrial Strategy Committee, on Decarbonising heat in homes, reported to the House on 5 February, and 13, 27 and 29 April 2021, HC 851; Oral evidence taken before the Business, Energy and Industrial Strategy Committee on 13 April 2021, on Work of the Department and Government response to Coronavirus, HC 301.]

Photo of Laurence Robertson Laurence Robertson Conservative, Tewkesbury 3:18 pm, 27th May 2021

Sorry for the slight delay due to technical problems. I ask Members attending physically whether they would not mind cleaning their spaces before they use them and as they leave the room. I remind Members that Mr Speaker has stated that masks should be worn in Westminster Hall other than when speaking.

Photo of Philip Dunne Philip Dunne Chair, Environmental Audit Committee, Chair, Environmental Audit Committee

I beg to move,

That this House
has considered the future of the Green Homes Grant voucher scheme.

It is a pleasure to serve under you, Mr Robertson, albeit remotely. Apologies if I am improperly dressed. I thank the Chairman of Ways and Means for allowing the debate to take place, because it was postponed as a result of Prorogation happening a day earlier than previously planned. I am grateful for that flexibility. I am moving the motion because, as Chair of the Environmental Audit Committee, I have a particular interest in energy efficiency and the contribution that it needs to make to enable the country to meet our net zero obligations.

The green homes grant scheme was announced with some fanfare in July last year by the Chancellor of the Exchequer as the centrepiece of the economic package of emergency measures to aid our economic recovery from covid. It was announced as a £1.5 billion scheme, not previously flagged as part of the manifesto commitment from the previous general election, with a very welcome ambition to improve 600,000 homes by March 2021 and in so doing create some 100,000 jobs.

The scheme did not open for applications until late September last year, which in itself led to an unfortunate hiatus in orders for energy efficiency improvements, as householders intending to proceed with some improvements stalled orders while they awaited the prospect of grant funding. The financial grants on offer to install energy efficiency measures and some types of low-carbon heating such as heat pumps were capped at £5,000 per property but up to £10,000 for fuel-poor households—but accessing the grants proved extremely difficult. I am sure others will come to that.

In November, the green homes grant scheme was extended for a further year to March 2022 due to the demand for applications. That was welcome, because one of the shortcomings of the scheme had been its short duration. The scheme was intended to mobilise the energy-efficiency supply chain, but as a consequence of intrinsic problems in its application and implementation, it had a perverse impact, with several installation companies seeking to use the scheme having to lay off staff because of the difficulties consumers had had in gaining access to it.

Prior to the voucher scheme’s closure in March this year, it had received more than 113,000 applications— 10 times as many as under the coalition Government’s green deal—so it was clear that there was demand. By 5 May, the last date for which statistics have been published, some 57,500 vouchers had been issued and 15,500 measures had been installed. Some 1,880 installation companies had expressed interest in becoming accredited under the scheme, but only 1,021 were classed as active, so barely half of those installers who had been interested in participating in the scheme had done so. I suspect that was in large part due to the varying uncertainties surrounding the scheme.

The Environmental Audit Committee held an inquiry on the energy efficiency of existing homes, which we launched in May last year—before the scheme had been announced—and concluded in March, a week before the scheme was scrapped. I am pleased to see my excellent Committee colleague, my hon. Friend Duncan Baker, in his place for the debate; I look forward to his contribution. The Committee made recommendations about necessary improvements to the scheme. We wanted to see it overhauled and, crucially, extended to make it more effective. We certainly did not want to see it scaled back or scrapped. I will not dwell on the shortcomings of the scheme any more than I have already—they were manifest, and I am sure others will point out some of the specific challenges—but focus my remarks on what is needed in the future.

It is hard to overstate the scale of the challenge presented by the need to improve the energy efficiency of our homes. The UK has one of the least efficient housing stocks in Europe. Domestic properties account for almost a fifth of the UK’s carbon emissions. There are 29 million homes across the UK, 19 million of which do not meet the energy performance certificate C rating. Even those that do, in many cases, do so without effective insulation and so could do better. The Climate Change Committee has said that the UK’s legally binding climate change targets will not be met without the near-complete elimination of greenhouse gas emissions from UK building stock by 2050.

Failure to address, with urgency, the energy efficiency of the country’s homes could seriously jeopardise our emissions, now enshrined in statute to be net zero by 2050. The Government know that, having been elected on a manifesto that allocated £9.2 billion to be spent during this Parliament on improving heat in buildings, only a third of which has been allocated now that the green homes grant scheme has been ended. The funding needs to be deployed in new, more flexible, more enduring and more realistic schemes, as I shall touch on when I conclude my remarks.

The task is colossal. In England alone, more than 10 million owner-occupied homes and more than 3 million private rented sector landlords need to upgrade the energy efficiency of their homes to become at least EPC C rated by 2035. In the Government response to our report, the suggestion was made that the target will be brought forward to around 2030. I would just like the scale of that to sink in with the Minister, who I know is not normally responsible for this area. If that acceleration were to happen, 13.6 million homes in England would require retrofitting over nine years. That is equivalent to 1.5 million properties a year or 125,000 properties a month, each and every month between, say, the end of this year and the end of 2030.

This will be at the same time as the construction industry, which is by and large responsible for this work, is supposed to be delivering 300,000 new homes a year. For context, I should say that the green homes grant scheme achieved 15,500 installations in six months. That is a fraction of what would be required every month from now until the end of the period.

The good news is that this is a colossal business opportunity, including for many small and medium-sized enterprises, for whom, as small business Minister, my hon. Friend has responsibility. For contractors to seize this opportunity, they need to have their confidence restored that the Government have a coherent plan, with support available, to be clearly established once the domestic renewable heat incentive scheme ends next March, which is currently the only scheme available.

The Government have been dropping hints that they will mandate energy efficiency at the point of sale or renovation of a property. We expect that to be spelled out in the heat in buildings strategy. Homeowners need support to get there. I would find it very challenging for the Government if minimum standards of energy efficiency were brought in for owner-occupiers without some financial support, given the scale of work required. It is not just buying a heat pump; it requires significant insulation, in particular to properties that are in isolated rural locations. Rural, stand-alone or elderly properties are often much harder to insulate with a retrofit and it is therefore more expensive. If no support is available, there is a genuine risk of blight on millions of homes.

What can we learn from the green homes grant scheme? Demand for the scheme was there. Our Committee received no evidence that covid was causing a problem, which at one point the Government hinted at. That was evidenced in the consumer survey that the Committee conducted: covid was not referenced as a problem at all. The good news is that there is demand there from home- owners.

The Government redirected some of the green homes grant funding to the local authority delivery scheme, which is welcome, but it will not reach all those who need help as only some local authorities have had successful bids. It may not help SMEs in the sector, where support for jobs is needed, since local authorities will often award projects to larger construction companies or to their own in-house workforces.

An example is E.ON, which recruited some 100 permanent roles to deliver the local authority scheme. That is good for those who were employed, but it does not help SMEs. We need to see support available to homeowners across the country—and with it, jobs. Bringing all homes up to EPC C would achieve more than the 100,000 jobs that the Government were talking about; one of our witnesses at the Committee, the Energy Efficiency Infrastructure Group, indicated that it would support 150,000 jobs from the moment it began.

I want to see a long-term replacement—certainly five years and preferably 10 years—for the green homes grant scheme. It should be funded as one of the spending review announcements. A replacement scheme needs to be as free of bureaucracy as possible, consistent—obviously—with the need to beware of the risk of fraud. Government and industry need to work together to design a scheme. Sadly, that was not the case with the green homes grant scheme from the point of inception. The scheme needs to be long-term to give the right signals to the sector, to train the people required to do the work, and to enable them to have confidence that they can afford the accreditation process.

Above all, the scheme needs to be easy for the public to understand. It needs to cover a simple hierarchy of measures and to be flexible enough to cope with the individual requirements of individual properties. No two properties are identical, and the notion of having two different tiers—in which some work has to be completed under one tier before being able to move on to the other —was far too complicated and put many people off.

The Government should look to other solutions to improve domestic energy efficiency. In our report, our Committee called for a reduction in VAT on renovations that improve energy efficiency. That would be a simple way to incentivise work. We already have zero rating on new homes, so why not zero or 5%, depending on the item, for those that need improving as well?

We feel that the Treasury has taken a sceptical approach to such measures. It ruled out changes to VAT or stamp duty rebates, which is another suggestion made by industry that we think has significant scope: the rebate would be spent on getting the building up to energy efficiency standards. The UK Green Building Council published a report this week containing a revenue-neutral proposal for just that: a stamp duty rebate to encourage energy efficiency, and I strongly urge the Minister to encourage his colleagues at the Treasury to look at such a scheme.

We welcome the fact that the Government are working with lenders for green mortgages. That has real potential, and there is a lot of enthusiasm in the mortgage industry for attaching green mortgages to their product portfolio. Again, we need to be wary that if we raise standards without providing support or mechanisms to allow people to improve their properties, potential buyers of properties that do not meet the standard may not get access to mortgages. That could have a significant impact on those properties’ value. The Government should also look to the national infrastructure bank to provide finance. The Government have said that the bank’s remit will be established this summer, and we hope that this will be included within it.

I will touch briefly on the energy performance certificate regime. The certificates were originally designed to provide a basic indicator of the energy cost of running a home, but they now underpin a range of Government policies and targets—including not only the legally binding fuel poverty targets, but the ambition to have as many homes as possible at grade C by 2035 or earlier, as indicated by me, and the minimum energy efficiency standard for private homes.

EPCs have a range of flaws, as was demonstrated to me by an assessor who I met last week. I asked to be taken through how the algorithm works. It is now undertaken through a centralised Government website, where the assessor puts in the parameters of the property and out comes the result. Just to illustrate to Members how perplexing this is, for a rural three-bedroom cottage currently fuelled by domestic heating oil in my constituency, where we had all the details, replacing that heating oil with a heat pump and doing nothing else would increase the EPC rating by two points. It is necessary to move by nine or 10 points in order to move up a rating, so doing so barely moves the dial on its own.

The EPC rating penalises off-grid and rural homes in particular, as too much weighting is given to fuel costs. If a person is on a domestic heating oil system because that is the cheapest method of heating their home, but they then introduce energy efficiency measures, that does not move the rating, and they cannot adopt a non-fossil fuel system if it is more expensive. The EPC methodology is therefore not addressing the fundamental challenge, so we recommend that it is fundamentally overhauled to support low-carbon heating measures by indicating in its headline rating not only the fuel cost of heating a property, but its energy and carbon metrics. This must be done before we set minimum efficiency standards for homes. Eye-catching top-line targets for heat pump installations are welcome, and raising minimum energy performance standards for homes is all very well, but what is desperately needed is a coherent plan to achieve the targets that are being set.

Homeowners need to be made aware of the benefits for the planet, but also for their pocket, as reduced energy demand will reduce energy bills. They need to be given the confidence to invest in energy efficiency and low-carbon heating. My Committee and I remain of the view that a replacement scheme for the green homes grant is needed, and that this should be announced and funded in the next spending review.

This replacement scheme will need to endure for several years and be free of bureaucratic obstacles. Alongside that, an overhaul of energy performance certificates is needed to make sure that progress towards decarbonising our homes is not penalised. The Government’s recent response to our report frankly raises the stakes for the heat in buildings strategy, which is due to be published; it has been much delayed, and we would like to see it published as soon as possible. We very much hope that we will not be disappointed by that strategy, and that tangible action to implement it, backed up by Treasury funding, is taken as soon as possible after its publication.

Photo of Darren Jones Darren Jones Chair, Business, Energy and Industrial Strategy Committee, Chair, Business, Energy and Industrial Strategy Committee 3:38 pm, 27th May 2021

It is a pleasure to serve under your chairmanship today, Mr Robertson. Before I begin, I declare an interest: my wife works for the Association for Decentralised Energy.

Today’s debate is a timely one, not just because of its necessary focus on the failures of the green homes grant scheme and the lessons we should draw, but because of the foundational importance of energy efficiency to the success of our net zero targets. It was therefore a pleasure to sponsor the debate application, and I commend Philip Dunne on his and his Committee’s leadership on this issue. His Committee was instrumental in highlighting concerns about this scheme earlier this year, and I am grateful for the seriousness and detail of their ongoing work in this area, not least in opening today’s debate.

We on the Business, Energy and Industrial Strategy Committee are nearing the end of a major inquiry looking directly at how Britain can meet the challenges posed by decarbonising heat in our homes, in addition to monitoring our overall progress as a country in meeting our net zero targets at home as we seek to lead abroad by example at COP. There is little point decarbonising the heating in our buildings if those buildings are not energy efficient, and we will not meet our net zero targets if we do not decarbonise how we heat our homes, so these issues are inextricably linked. Those decarbonisation targets present huge opportunities for citizens right across the country, from reducing our energy bills at home and making our homes more comfortable to live in to creating consumer demand for small and large businesses in every community, and creating green jobs for the workers who will be needed to go into each and every one of our homes over the decade ahead.

That was the key impetus behind the green homes grant scheme announcement when it was unveiled last year, and rightly so. It is therefore critically important that the grant scheme’s failure, and that of its predecessor initiatives, does not put paid to that ambition but provides us with an opportunity to reflect and reboot. At the same time, the scale of the green homes grant debacle—which, as has been pointed out, the Government scrapped after enabling fewer than 6,000 installations, or less than 1% of its stated target—underlined the importance of fully investigating its failings to ensure that they are not repeated.

The right hon. Member for Ludlow and his Committee drew out in welcome detail how a panoply of design flaws led to an approvals framework that proved burdensome for builders and installers, impenetrable to homeowners, and saw installations run up against regulatory muddle and paralysing delays. Shipping out the delivery of the scheme to the lowest pay provider was neither realistic nor sensible, and realising the importance and capacity of local authorities to deliver better than Whitehall in my view is key.

Too easily, however, that experience could give way to miserablism and receding ambition, so as we interrogate the causes of the scheme’s failure, I will stress the importance of getting back on track quickly. Lifting energy efficiency standards in homes remains the key short-term measure of success in decarbonising, not only because the quality of our existing buildings is often so inadequate but because real progress is feasibly deliverable, with the Climate Change Committee putting the per-home cost at under £10,000.

In spite of that, our progress to date in decarbonising buildings has stalled, with emission reductions in the sector sitting stagnant for more than a decade. The single biggest impediment to substantial private sector investment, however—most importantly, to remedy Britain’s skills shortfall in this area, which continues to put a ceiling on our capacity to deliver—remains the Government’s hesitancy.

Last month, my Committee heard evidence about the kind of time and financial outlay that smaller businesses confront in getting accredited to take on those jobs. For businesses to believe that such investments are justified, it is incumbent on Ministers to provide certainty that the Government will be in it for the long haul. We have seen far too many false starts. It is past time for a properly funded strategy, sustained over the coming decade and beyond, and I therefore associate myself with the calls of the right hon. Member for Ludlow.

In that spirit, my biggest worry is that the green homes grant experience typifies the pervasive lack of strategy running through the Government’s attitude to climate policy. The fanfare that accompanied the scheme’s unveiling last year was of a piece with a now-typical approach: far-reaching targets, soaring rhetoric, but a failure to follow through. Targets, however ambitious, are no substitute for delivery. The scheme’s premature demise is an object lesson in the importance of getting the basics right.

I am confident that we can rise to that challenge, and create a sense of hope and opportunity for the British people as we move towards our net zero target, but we must be honest with ourselves, learn the lessons and step up to meet that challenge in the first place. I hope that the debate, the work of the respective Select Committees and the preparation of Ministers to put forward a replacement for the green homes grant in advance of the Budget later this year provide the space and opportunity to get this right once and for all.

Photo of David Johnston David Johnston Conservative, Wantage 3:43 pm, 27th May 2021

It is a pleasure to serve under your chairmanship, Mr Robertson.

The debate is an important one, because when we talk about climate change, we tend to focus a lot more on transport than we do on buildings, and yet buildings are our second biggest cause of emissions. Domestic buildings are 30% of our energy use and 19% of our emissions overall.

Ultimately, I would like to see more of what I have in my constituency, from Greencore Construction, which has built homes that are net zero in both build and use. It sold them to housing associations at the same price they would pay for other houses. It has continued to innovate and, with recent modifications, reduced the carbon emissions by a further 40%. Those are now carbon-positive homes. I have taken the Secretary of State for BEIS and others to see them, because what the company is doing is really impressive. In July, it will be talking at my pre-COP summit for Wantage and Didcot constituents.

More broadly, I welcome the commitment on the future homes standard to reduce the amount of emissions by 75% to 80%. That is very positive but, again, that is about new homes and we know we have an issue with the homes that have already been built.

I was excited by the green homes grant scheme. I was excited by the ambition to make homes more energy-efficient. I was also excited by the jobs that I hoped it would stimulate in the supply chain. I was very disappointed when it was cancelled due, at least in part, to lack of take-up, although there were clearly other issues with it.

We have a heat and building strategy coming. We will have to see what is in that—I hope it will tackle some of the issues we are discussing—but as of today, I would support another scheme. I will quickly offer some observations on things that I have seen as a constituency MP which we would need to retain or change if we were to have a new scheme.

First, I thought it was really important that we gave more financial support to low-income households. That is the fairness aspect that shines through in the Climate Assembly report. We do not want policy decisions and judgments to be made by the most affluent in society; we should not judge everything that those on low incomes are doing without giving them the support to make changes that they may well want to but just do not have the means to make.

Secondly, price hikes very definitely took place once the scheme had been announced. Constituents wrote to me to say, “I know what that should cost because I looked at the price last week, and suddenly it has gone up.” I am not sure that there is a lot the Government can do about that—they had price guidelines for applications to the scheme. I suspect this kind of thing always happens, but I think it would be positive if we did whatever we could to avoid price hikes.

Thirdly, there was debate about the kitemark. I defended the use of the kitemark for the tradesmen, because it is important that we do not have cowboy tradesmen—for want of a better term—doing shoddy work. I know there is a debate about whether TrustMark was the right one for this. Maybe it was not, but I think it is important to have that kitemark.

Fourthly, there is a broader issue—not just for this scheme but for our strategy as a whole—relating to historic listed buildings. I have four towns in my constituency, but 64 villages. The homes that are built in Didcot are of varying quality, but they are new, whereas the homes in the villages are often protected in various ways and face a whole bucket of issues. Many of the people in those villages are keen to make their own contributions to combating climate change, but there is a range of things that we have not yet got to grips with, from the fact that some of those homes can use only oil for their heating because they are off the gas grid, to whether they are allowed to have solar panels. There is also lime rendering, which was something about which I did not know very much, but which certain types of home need as part of the insulation process. That can only be done at certain times of the year, and there are not many tradesmen who can do it.

Those things feed into the point made by my right hon. Friend Philip Dunne: if we are going to have another scheme, it needs to be over a long enough time period that we can get those things right. We need to make sure that prices are not hiked too much, that we are using the right kitemark, and that tradesmen see it as in their interests to get that kitemark because of the length of time that it will cover. We also need the scheme to cover enough seasons that those things that can be done only at certain times of the year can be included. We might even train more people who have experience with older, historic buildings, because that issue left rural areas at a considerable disadvantage in the short timeframe the scheme was to designed to cover.

We will probably still spend a lot more time talking about the cars we drive and the plane journeys we take, but unless we can make the progress we need to make on buildings, we will continue to hamstring our ability to tackle our net zero goals.

Photo of Mick Whitley Mick Whitley Labour, Birkenhead 3:49 pm, 27th May 2021

It is pleasure to serve under your chairmanship, Mr Robertson. I thank Philip Dunne for securing this important debate. I draw attention to my entry in the Register of Members’ Financial Interests.

In the summer of 2020, I joined Members from across the House, along with trade unions, industry leaders and environmental groups, in welcoming the announcement of the green homes grants scheme. It represented a welcome opportunity to support the construction industry at a time of immense economic hardship, to slash energy costs and tackle the scourge of fuel poverty, and to create thousands of high-quality jobs in left-behind communities such as my constituency of Birkenhead.

Less than a year later, however, the scheme has been consigned to the scrapheap and businesses have been left to pay the price. Ministerial infighting and bureaucratic incompetence has doomed to abject failure what was supposed to be a shovel-ready project. Of the £1.5 billion originally allotted, around £1.4 billion has gone unspent, and a measly £300 million has been reallocated to the local authority delivery scheme. Instead of creating the 100,000 jobs that were promised, the TUC estimates that the scrappage of the green homes grant will cost 13,000 jobs across the north west, in a shameful betrayal of the very work of small businesses that the scheme was supposed to support.

We should not be surprised. The scrapping of the scheme is just the latest in a long line of Government failures to live up to promises on climate change—failures that have left the UK widely off course to meet both our fourth and fifth carbon budgets. If we are serious about tackling climate breakdown, we need urgent action to reduce household emissions. However, this is not just about the environment. The retrofitting of homes and the transition to low-carbon heating systems such as heat pumps and hydrogen boilers also has a vital role to play in delivering on the Chancellor’s promise of a green jobs revolution and creating badly-needed jobs in towns such as Birkenhead, which for far too long have suffered a chronic shortage of work and training opportunities.

It is imperative that the Government now reflect on the many failings of the green homes grant scheme and get us back on track to meeting our targets for retrofitting homes. That means working with industry leaders and local authorities to design a plan that is both ambitious and achievable and puts job creation and training opportunities for young people at its heart.

Photo of Duncan Baker Duncan Baker Conservative, North Norfolk 3:51 pm, 27th May 2021

It is a pleasure to serve under your chairmanship, Mr Robertson. It is also an honour to speak in the debate called by the excellent Chair of the Environmental Audit Committee, my right hon. Friend Philip Dunne, and I am delighted to support him here today.

With every good intention, the Government launched this scheme to a fanfare, as we have heard, in September 2020. Of course, one has to applaud the efforts to help households improve their energy efficiency, placing them at the centre to decarbonise our homes. However, there is no doubt that the scheme has been beset with problems. The take-up has been well short of any expectations, but then, as they say, hindsight is a wonderful thing.

Launching a scheme without having anywhere near enough approved installers—as we heard, just 1,021 active companies—meant that the issues under the green homes grant quickly became apparent. My constituency office has tried to help many people who struggled to access the grants. It did not help, obviously, that we had further lockdowns and an apparent reluctance of home- owners to see installers come into their homes. However, that finding was not included in our Environmental Audit Committee report. We will give the benefit to the Government on that, and I know that they cannot be blamed for those further issues, but we did not see evidence of that.

I welcomed the drive to create jobs with the scheme, especially in the construction and property renovation sector that drives a lot of our economy. The drive to improve the energy efficiency of low-income households, reduce fuel poverty and work to phase out high-carbon fossil fuel heating is all laudable. Decarbonising our homes is a key priority in the race to net zero, and through the 10-point plan for a green industrial revolution and the energy White Paper, the Government have set out how they plan to decarbonise our buildings. However, I want to make a point here about a preoccupation with retrofitting, which has led to my Environmental Audit Committee inquiry into the sustainability of the build environment. The green homes grant is focused on reducing carbon emissions in the operating efficiency of an existing home, but we have hardly touched on the build environment. The materials that we use in the construction sector account for 11% of emissions that contribute to climate change. Concrete and steel production is dreadful for the environment. We need to look at more sustainable materials such as engineered wood and other more organic materials, which are far more prevalent in Europe. It is my hope that my inquiry will shine a light on that.

I wish that in the green homes grant scheme conception the use of natural materials such as lambs’ wool insulation had been given far greater weight. Natural materials are growing in prominence, but the Government must further incentivise consumers to drive their take-up. The green homes grant could have been the perfect launchpad to do this, which is why I welcome one of our findings—that consumers should be incentivised with a VAT cut.

I applaud every intention of the scheme. I recognise, with fairness, its shortcomings. Some of them could have been foreseen; some should have been foreseen; and some were exacerbated by extraordinary circumstances. Nevertheless the intentions and the lessons are valuable. The idea behind the scheme was not a bad one, but schemes involving vouchers—I should know this from being an ex-retailer—sometimes take a long time to bed in. We must have people ready to go.

So, having learned those lessons, I hope that instead of scrapping the scheme entirely, there is the appetite for another attempt, learning from where we went wrong. If we are to get anywhere near the targets that we need to reach with our homes, the incentives in the scheme must be kept going. The findings of the EAC need heeding, because the demand was there; that was proved. Reducing VAT is a very strong idea and I again echo the thoughts of the Chairman of the EAC in saying to the Minister, “Let’s try to extend the scheme, rather than have a full-scale scrapping of it”.

Photo of Fleur Anderson Fleur Anderson Shadow Minister (Cabinet Office) 3:56 pm, 27th May 2021

It is a pleasure to serve under your chairship, Mr Robertson; I think that I do so for the first time.

I congratulate Philip Dunne on securing this hugely important debate, on his Committee’s leadership on this issue, and on keeping alive the idea and the ambition of the green homes grant. I hope that there will be many future conversations about it, and that this will not be the end of it; I hope that the green homes grant will not slip away silently without our learning from it.

I think there is also some cross-party agreement here, which I always welcome. There is agreement about the need for the scheme; a general welcoming of the scheme’s ambition; agreement about the need to learn from and improve on the scheme; and agreement about the need to bring it back in some form. I hope that this debate will contribute to its return.

Like other Members, several constituents have contacted me after trying and failing to get a green homes grant. One of them wanted to have improvements in tier two but not in tier one, so they really wanted to make a change to their house, which was very commendable, but they could not get into the scheme. And others, in trying to access it, had to go back three times for new quotes. Thankfully, they were very persistent—they really wanted to do this—but they still have not heard about their application, despite making it in early October. That shows some of the frustrations that have arisen, and that the scheme was set up with barriers inside it that stopped it from working. I will go on to say more about those barriers.

In total, 40% of UK carbon emissions come from UK households, with over half coming from heating and electricity. As the Committee on Climate Change has made clear, those emissions need to be reduced by 44% by 2030 if we are to meet the UK’s fifth carbon budget. As was said earlier, that is a huge challenge.

If we look at the 15,500 successful applicants to the scheme in the six months that it was running, and if we look at the 10 million owner-occupied homes that need to be retrofitted and brought up to environmental standards, we can see that at that rate it will take us 323 years to deliver the change we need. In a climate emergency, we simply do not have that time.

Last month, I held an all-party parliamentary group on sustainable resource roundtable with leaders from the energy and buildings industries, company leaders and other representatives, to get their views on the ending of the grant and what we can learn from it. They were incredibly disappointed at its closure and believe that we need it back as soon as possible, so there is willingness from the industry to see the scheme work in a future form. As has been said, demand was definitely there. More than 210,000 applications had been made to the scheme by the time of its closure, and I think there would have been even more if the application process had been easier.

There were certainly problems with the design of the scheme, but the overwhelming enthusiasm with which it was met by householders is very striking. That willingness to pay for home efficiency improvements, if it could be encouraged with some financial help in conjunction with Government schemes, should not be squandered now. We should press on.

Those in attendance at that meeting felt that ending the scheme after just six months of operation suggested an inconsistent approach to energy efficiency and a lack of faith in Government policy. In fact, the owner-occupied market may now be disincentivised as a result, which is why it is even more important that, as well as looking back to learn, we quickly move on and address people’s willingness to take this up.

It is absolutely critical that we act fast. Whatever comes next, we must, as a minimum, include the following. First, as has been said, the scheme must last a minimum of 10 years, to allow industry to develop the necessary skills, provide investor confidence and meet objectives over a sustained period. Those skills could be built up and delivered by local colleges such as mine, which would love to be part of the green jobs revolution that this could bring about. If the Government committed to a 10-year grant programme of home insulation and renewable energy improvements, suppliers could expand to meet that demand, knowing that there was time to invest.

Secondly, a future scheme must cover all homes. As well as social housing, the Government must support owner-occupied homes and private landlords in the energy efficiency transition. That will require the Government to implement and co-ordinate a range of concurrent schemes to suit the different markets. The Government must think big on this.

Thirdly, the scheme must be easy to access for my and all our constituents across the country. People are willing to access it, but they will put off by any barriers put in their way. If it is really difficult to access, the scheme will fail. It must be easy to access.

Fourthly, a future scheme must expand the accredited supplier base. Inviting a small number of companies to deliver the grant was a mistake, as they were overwhelmed by demand at a time when the number of people wanting to do DIY on their homes increased massively during lockdown. The British Board of Agrément accreditation service provides quality assurance for all the relevant building sectors: insulation, wall cladding, floors, heating, ventilation, walls and doors and roofing. All of those accredited suppliers need to be able to participate in the scheme.

Fifthly, a new cohort of inspectors must be created and trained. This was a limiting factor in the previous scheme. Grenfell sadly demonstrated just how dangerously unregulated the building industry has become. Creating a new body of locally based and easily accessible inspectors, who would also inspect the delivery of grant scheme installations, would provide the dual benefit of building safety and fraud avoidance.

Finally, it is vital that the Government work with the building industry right from the start of the scheme’s creation. They did not do that last time. It has been suggested that they could easily work with the industry through the Construction Leadership Council. They must also work with financial services, including mortgage companies, to ensure that the system is deliverable. This must include providing financial incentives to homeowners, for without the grant, decarbonising a home is very expensive. Some of my constituents in Putney received quotes, as required by the scheme, of up to £20,000 to properly decarbonise their home. Financial support needs to be made available to deliver that, and more financial support needs to be made available to people on low incomes. That could involve grants or personal tax relief, although that would not incentivise all households. We need to invest in public engagement to raise consumer awareness of the additional benefit of reducing heating bills.

I would like the Minister’s assurance that he will listen to the voices of the building industry, environmental groups and potential consumers—householders, lease- holders, landlords and local authorities—when designing whatever scheme comes next. We were all desperate for the green homes grant scheme to succeed and were desperately disappointed at its closure. We simply will not achieve net zero without green homes. COP26 will provide the perfect opportunity to announce a viable, long-term approach to reducing greenhouse gas emissions from homes. The Government must not miss this opportunity.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Business, Energy and Industrial Strategy) 4:05 pm, 27th May 2021

We have had an excellent debate, with a very high degree of agreement among those taking part, not only about the failings of this particular scheme but about the imperative at the heart of what we have been talking about this afternoon. That is the imperative of ensuring that, within a very short time, we have secured in this country a massive uplift in the energy efficiency of homes across all sectors of housing—not just the easy-to-treat homes but the ones that have single cavity walls, for example, and are difficult to treat. We have to put into those homes different forms of heating to go along with the energy efficiency uprating, and the reason why we have to do that is of course to decrease very substantially the emissions from buildings, which contribute so substantially to CO2 emissions overall, which could lead us well away from our target of net zero by 2050. Indeed, buildings in the UK emit some 19% of emissions overall, and the vast, and a substantial, majority of that is in residential homes, so the targeting of schemes to uprate energy efficiency in homes is vital.

The Chair of the Environmental Audit Committee, Philip Dunne, made an excellent contribution. By the way, I congratulate his Committee on its hard work in looking forensically not just at this particular scheme, but at the things we need to do in order to get to where we want to go on home insulation. He mentioned the figure of 13.6 million homes—not new homes but homes of all kinds. As he said, all homes have different requirements when it comes to their retrofit. There are 13.6 million homes that will basically need work to be done on them over the next nine years. He estimated that that equates to about 1.5 million properties a year over the next nine years needing to have those measures.

Although I welcomed the Treasury’s initial announcement in summer 2020 that what looked like a substantial amount of money would be made available for retrofitting homes, we have to understand that, even at that point, it was substantially less than the sum required to meet the ambition set out in the energy White Paper to make all homes EPC conform to EPC band C. I fully accept the Environmental Audit Committee Chair’s strictures about the use and accuracy of EPCs. Nevertheless, the ambition is that all properties should be band C or above by 2035. That date, I think, should come further forward, but that is the area that we are looking at.

The idea that we could make some reasonably rapid initial progress with a scheme in the private sector involving vouchers was a welcome start. I think that the only lesson or conclusion that we can draw from the allocation of this particular fund, the particular way it was done and the subsequent requirement placed on BEIS to draw up a scheme is that we should never do it in this way again, as far as our targets are concerned. Perhaps there is a lesson from what has happened over the last few months.

I am interested to hear from the Minister about this. My understanding of how the scheme progressed is that the Treasury, without any idea of what was involved in the process, announced that money would be made available—£1.5 billion, with £500 million for the local authority delivery scheme—with about as much detail as I have set out this afternoon. The Treasury then said to BEIS, “Go away and work up a scheme to make it happen, and we want it on the ground as quicky as possible.” Had I been a fly on the wall during those discussions, I would have hoped to have seen BEIS kicking back at the Treasury and saying, “Look, this is ludicrous. You can’t do it this way. You can’t expect a scheme to be worked up in this way. And, by the way, you can’t expect a scheme to be conceived, put into operation, undertaken and closed within a year. You just can’t do it that way.” That is what BEIS should have said to the Treasury. Instead, it rapidly produced a scheme and, in so doing, undertook the services of a consultancy company based in America which had no experience of doing these sorts of operations.

Frankly, the scheme was doomed not to work from the start. Indeed, that is what happened. The final figures, which came out in May, show the frankly pathetic number of measures that arose from the scheme. We also heard, while we ran through that period, dreadful stories of building companies that had geared themselves up to do the work but did not get paid for it. There were immeasurable layers of bureaucracy involved in getting voucher schemes going, even though many householders desperately wanted to take advantage of them.

I have the figures from the end of February, which were released before the final figures were made available. At that point—the scheme was still going but it was nearing its end—123,000 vouchers had been applied for, but only 28,000 had been issued. What was the company running this organisation doing by working out the scheme in such a way? There were only 5,800 installations at that point, and of those, only 900 or so were for low carbon measures. This scheme was not just a pathetic failure; it has put the cause of retrofitting homes back substantially. Companies that wanted to do the work were burned yet again and will perhaps be reluctant to undertake further work. Disappointed householders were grievously misled on the energy uprating process, and precious time has been lost for getting to grips with this. To say, “This is a lesson learned in how not to do it,” is a bit of an understatement.

I hope that the considerations raised by every contributor this afternoon will be at the heart of the lessons that the Department will take on board for future projects on energy efficiency uprating. The scheme has to be serious. It has to have the right amount of money to make a difference. The timescale has to be long enough for people to be able to do the work properly and have confidence in the system, and for the variety of necessary measures to be put in place, including, as the Chair of the EAC said, measures that suit the different circumstances of each household and the time required to get the work done.

We also ought to take lessons from the element of the scheme that had some purchase—namely, the local authority part, which has been a relative success. Although it made local authorities adhere to breakneck timescales, they were nevertheless often able to deliver because they were not an American consultancy firm trying to do things by numbers overseas. Rather, they were on the ground with their local communities, engaged in the work. That is another lesson that we ought to draw from this fiasco—give it to local agencies that can actually do the work properly on the ground and make it happen on a daily basis, rather than run it remotely from the centre.

We can draw some valuable lessons from this fiasco. I am tempted to say that it is such a dreadful catastrophe for the cause of energy efficiency activity that, in the words of Stanley Holloway,

“someone’s got to be summonsed!”

It is a shocking failure of Government.

I hope that the lessons will have been at least partly learned by the time the heat in buildings strategy comes out, which, as hon. Members have mentioned, has been delayed on several occasions. I should not say this as a shadow Minister—it should be for the Minister to say this—but I am confident that it will come out shortly. I hope that the Minister will be able to tell us that it will come out in the next few days or weeks and that it will contain a number of the lessons mentioned this afternoon for bringing forward the ambition of energy efficiency.

All of that is contained in the energy White Paper. I hope that the heat in buildings strategy will address itself to the width and depth of the task in front of us. We know that that we have not appreciated the scale of the task, but I hope that the strategy will, finally, address what we actually need to do to achieve our energy efficiency targets.

Photo of Laurence Robertson Laurence Robertson Conservative, Tewkesbury

We need to leave a couple of minutes for Mr Dunne to wind up at the end. We now go to the Minister, Paul Scully.

Photo of Paul Scully Paul Scully Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), Minister of State (London) 4:19 pm, 27th May 2021

It is a pleasure to serve under your chairmanship, Mr Robertson. Rest assured that my right hon. Friend Philip Dunne will have plenty more than two minutes to summarise the debate. I congratulate my right hon. Friend and Darren Jones on securing this debate on the future of the green homes grant scheme, which has been conducted in a conducive way despite concerns about the scheme.

It is really important that as we discuss the future of the green homes grant scheme, we also discuss the wider future of decarbonising our country’s 30 million buildings to meet our target of net zero carbon emissions by 2050. As hon. Members know, the Government’s aim is to reduce emissions by 78% from 1990 levels, which is one of the most ambitious targets in the world and is supported by our sixth carbon budget, which limits the volume of greenhouse gases emitted over a five-year period from 2033 to 2037, taking the UK more than three quarters of the way towards reaching net zero by 2050.

The carbon budget will ensure that Britain remains on track to end its contribution to climate change while remaining consistent with the Paris agreement temperature goal to limit global warming to well below 2° C and pursue efforts towards 1.5° C. In the energy White Paper, as has been mentioned, we set out our ambition and approach to get as many homes as possible to energy performance certificate band C by 2035, which includes our aim to deploy 600,000 heat pumps a year by 2028. We need far more households to heat their homes without burning fossil fuels such as oil and gas.

My right hon. Friend talked about the EPC, which is a widely available, standardised means of assessing sustainability. We will not be getting rid of the EPC, but none the less we will continue to make improvements to its accuracy, as outlined in the action plan as a result of the consultation we have undertaken.

Other ways and means of tackling climate change are outlined in the Prime Minister’s 10-point plan for a green industrial revolution, which sets out how we will mobilise £12 billion of Government investment, and potentially three times as much from the private sector, by 2030. That will level up regions across the UK and support up to 90,000 highly skilled green jobs across the UK in this Parliament, and up to 250,000 by 2030. The UK is committed to taking advantage of the huge economic opportunities that the transition to a green economy offers, including large-scale job creation and even more jobs being supported in the green economy.

In addition, as we have heard, 2021 is one of the most important years for global Britain as we host the G7 presidency and the UN climate change conference, COP26, in Glasgow in November. We know that the world is watching as we lead the way in reducing carbon emissions from homes, businesses and public sector buildings.

I welcome the news from my hon. Friend David Johnston about his pre-COP26 conference in his constituency. It is excellent that as well as doing the countrywide conference that brings global attention to the UK, and Glasgow in particular, we all do our bit as champions within our constituencies. I congratulate him on that.

We are making excellent progress across much of that investment; substantial sums have already been spent on schools, hospitals and social housing as well as in privately owned or rented homes, particularly in partnership with local authorities. Just one part of that is the green homes grant voucher scheme, which was launched to help householders offset the cost of installing energy efficiency measures in their homes. Despite the fact that the scheme received many applications, as we heard, it did not deliver at the rate and scale that we originally hoped. As a result of that, and because the Government remain committed to reaching our ambitious goals by 2050, we had to look again at how best to support householders in decarbonising their homes at a rapid pace. We took stock and considered our approach. We reviewed our options and made a decision to close the voucher scheme, which ceased taking new applications at 5pm on 31 March.

As we have heard, the Government have already issued more than 62,000 vouchers, worth more than £262 million, and we continue to process more each and every day. No one who made a valid application by that closing date will miss out, but clearly, as we have heard, that does not mean that our work is finished. We are now refocusing our efforts and substantial funding on alternative approaches.

The Government will of course reflect on the lessons learnt from the closure of the green homes grant voucher scheme. In response to Fleur Anderson, we will learn those lessons, but our ambition is not diminished and we will very much listen to everyone who will be involved with us in the collective drive towards net zero, especially on decarbonising homes, which is so important. Other elements of the work on decarbonising homes have seen great successes. The local authority delivery element of the green homes grant scheme, for example, aims to support measures such as insulation and low-carbon heating. Of around 50,000 low-income households, both privately owned and rented, it is important, as we have heard, to make sure that we can address and support the people who cannot otherwise go about this very easily.

To date, the scheme has allocated £500 million of funding across the English regions. That investment is already being felt in constituencies across the country. For example, Bristol City Council has been awarded £2.6 million to retrofit 275 homes, reducing energy bills and creating warmer homes for low-income households. That project plans to install solar and solar thermal panels and underfloor insulation to keep residents warm through the winter months. The scheme, alongside the social housing decarbonisation fund, has now seen the Government commit an additional £300 million to green homes upgrades. Mick Whitley talked about “only” £300 million, but we cannot dismiss telephone number figures of investment. I think that in most contexts many people in this country would look askance at “only” alongside £300 million.

Such investment means that for the financial year 2021-22 we are investing more than £1.3 billion for energy efficiency and low-carbon heating up and down the country. That not only ensures that we continue to cut carbon, but supports tens of thousands of jobs across the country and reduces heating costs for those most in need, helping to build back greener and level up in one go.

I was pleased to hear from my hon. Friend Duncan Baker about the work that he is doing on sustainable materials. Yes, we can decarbonise homes and have retrofitting, but it is important that we plan for the future. We are embedding new practices with new materials, or newly purposed materials, because wood is hardly a new material, but it is very sustainable if we get it right. My hon. Friend’s contribution is important to our thinking and to our drive to net zero, so I thank him and congratulate him on his work.

As the world looks to recover from the impact of coronavirus on our livelihoods and our economy, we have the chance to build back better and invest in making the UK a global leader in green technologies. I thank my right hon. Friend the Member for Ludlow once again for securing this debate. I appreciate all the comments that have been made, and we are listening. My colleagues, the Energy Minister and other Government Members, will reflect on the words said today as we redouble our efforts to make sure, as I have said, that we keep to our ambition as we drive to net zero by 2050.

Photo of Philip Dunne Philip Dunne Chair, Environmental Audit Committee, Chair, Environmental Audit Committee 4:28 pm, 27th May 2021

I want to start by thanking the Minister, my hon. Friend Paul Scully, for his wind-up speech and for undertaking to listen to the contributions in this debate, and indeed to the submissions made by the Committee that I am proud to chair. Before I respond to the points made, I also want to thank others who have participated, particularly Darren Jones, the Chair of the BEIS Select Committee, who co-sponsored this afternoon’s debate with me. We work closely together on climate change issues, and it was good to see his characteristically measured and impressive contribution to the debate. We look forward with great interest to the results of the inquiry that is being undertaken into energy efficiency measures.

I also want to thank other Members who participated in the debate. My hon. Friend David Johnston made an impassioned plea for contractors in his constituency. Notably, he called for future measures to help those who are fuel-poor, as did the hon. Members for Putney (Fleur Anderson) and for Birkenhead (Mick Whitley).

In the debate, although we were talking about an issue that is, let us face it, not the Government’s finest hour in implementing a new support scheme, it was particularly striking that there was not a great deal of party point-scoring. The measured tone of the debate was about learning lessons to ensure that in future, whatever scheme is put in place to replace the green homes grant scheme, it is effective and can deliver on what is, frankly, and clearly from this debate, a very shared objective. In that respect, Dr Whitehead, who speaks for the Opposition, was characteristically measured in his tone, too, for which I am very grateful.

On contributions, I cannot wind up without thanking for his comments my good friend, my hon. Friend Duncan Baker, who plays such a valuable role on my Committee. He focused much of his remarks on ensuring that, when we look at energy efficiency measures, we give due credit to the embodied carbon impact of the materials used. He makes a very good point: we cannot just carry on using materials that in themselves create enormous carbon cost in their production. That is why he was persuasive in encouraging our Committee to undertake a new inquiry, which we have just launched, into the sustainability of the built environment, looking in particular at construction materials, in which he has such an interest.

To conclude, I encourage the Minister, in his discussions in the Department and with the industry, to ensure that we do not seek just to introduce headline-grabbing measures. This week there has been a rumour that the Government are thinking about scrapping gas boilers, introducing an end date for their installation. That would be as striking for domestic buildings as the ban on internal combustion engines in the sale of new petrol and diesel cars from 2030 will be for that industry.

There is a major difference, however: the motor vehicle industry has been working on alternative-fuel vehicles for many years and has hundreds—literally, I think, this year 100—of new models coming into its showrooms, for people to start buying now. We are not in that position in domestic heating. In 2019, the last year for which figures are available, 1.7 million gas boilers were installed in our homes. In the same year, 30,000 heat pumps were installed. That is 56 times as many gas boilers as heat pumps.

As we have discussed, just installing a heat pump will not cause a home to qualify for a higher energy performance certificate band. The technology is there, but what is not there yet is what will be required for a new scheme: it should only be introduced, in my view, when the technology is available and affordable and when it is achievable to replace such a significant part of the construction industry’s standard operating practice with something that can be installed because enough people are skilled to do so.

These measures are not simple. A great deal of thought is needed for their introduction, and work with the industry to ensure that any successor scheme to the green homes grant has a real prospect of restoring confidence to the industry and to consumers, so that it can be adopted. I very much look forward to what the heat and buildings strategy will say, and to the spending review this autumn.

Question put and agreed to.

Resolved,

That this House
has considered the future of the Green Homes Grant voucher scheme.

Sitting adjourned.