Explained: Green Homes Grant scheme

As part of his Summer Economic Update, Rishi Sunak announced last week that the Government will provide a new  Green Homes Grant designed to help insulate homes and reduce heating bills.

Some of the details are yet to be announced but in this blog, we explain how the new grants will work and consider whether people will use the funding to make their homes more environmentally friendly.

What is a Green Homes Grant?

A Green Homes Grant is a voucher available from the Government’s new £2bn scheme. The grant mean the Government will pay at least two-thirds of the cost of home improvements that save energy such as loft, wall and floor insulation or double-glazing.

Around half of the fund will go to the poorest homeowners, who will not have to contribute anything to the cost of the green improvements.

The grant will be worth up to £5,000 per household, or up to £10,000 for the poorest households.

When the scheme launches in September 2020, you will be able to submit an online application for the recommended energy efficiency measures and find the details of accredited local suppliers.

A qualified retrofitter will then visit your home and assess how you can reduce your need for heating.

Once you have a quote from one of these suppliers and the work is approved, the Government will issue the grant voucher.

Who can claim a voucher?

Homeowners and landlords in England will be able to apply. The Government states it wants the scheme to help pay for improvements in over 600,000 homes so it should be widely available.

It is unlikely there will be any income requirements for the £5,000 grants, but MoneySavingExpert has suggested there may be a pre-qualifying inspection or assessment to check if the improvements would be suitable for your home.

What will the green improvements do?

The grants are designed to help homeowners reduce their heating bills and promote energy efficiency, as well as boosting the economy by creating thousands of green jobs for tradespeople.

The Government believes the improvements could save households up to £600 per year on their heating bills.

It also hopes the grants could cut the UK’s carbon dioxide emissions by more than half a megatonne a year. Poorly insulated properties were responsible for approximately 20 per cent of total emissions last year.

UK homes are also among the draughtiest in Europe, with less than a third meeting the standard needed to bring property emissions down to zero.

Will people use it?

The Government tried to introduce a similar scheme back in 2013 as part of its Green Deal programme. That scheme was also designed to improve energy efficiency, but it was much more complicated than the new Green Homes Grant.

In the old scheme, funding was only available through loans rather than a grant and as a result, only 14,000 households applied.

The Green Homes Grants should be more successful than the loans on that basis. A recent survey found that 59% of people wanted to make their homes more environmentally friendly, but couldn’t afford the cost of the improvements. By providing most of the funding, the Government’s new scheme should be much more popular.

However, raising awareness and engagement within the energy market will be needed to ensure the scheme hits its targets. Given other issues in the past like the smart meter roll-out and the large proportion of UK households still on expensive standard variable tariffs, innovative approaches to ensure consumers understand and feel comfortable accessing the grants are required.

To ensure the UK has a realistic chance of hitting its net zero target whilst also looking after its customers, the energy market must consider how it can champion these grants and prevent more people from slipping into fuel poverty.