Green Homes Grant: a stimulus that should be sustained

Guest blog by John Stephan & Mithun Patel, from the Building Products & Services group at CPA Associates, BDO LLP.

Earlier this year, the Government announced the launch of the Green Homes Grant – a scheme designed to enable householders to make energy improvements to their homes, but one that provides real stimulus to the industry, particularly in the private repairs, maintenance and improvements (RM&I) sector.

The £2 billion scheme – part of a wider £3 billion government plan to cut carbon emissions – officially went live at the end of September. Homeowners and residential landlords can now apply for a Green Homes Grant voucher covering two-thirds of the cost of installing energy efficient improvements to homes, up to a maximum government contribution of £5,000.

Improvements include insulating homes to help reduce energy usage and installing low-carbon heating to lower the amount of carbon dioxide homes produce. But how practical is it, and does it go far enough?

Within weeks of the launch, concerns have already been raised about capacity – both the number of eligible contractors, who must be registered with TrustMark or MCS, and the sector’s ability to complete the improvements in the six-month window provided by the Government. The scheme is set to close on 31 March 2021.

According to the Government, more than 9,400 applications were made in the first few days of the scheme, with almost 1,000 companies signing up to the Green Homes Grant, ‘with more registering every day’.

Despite obvious teething pains, the Government’s optimism and intention behind the scheme is one that is much-needed for a sector that has been hard-hit by the COVID-19 pandemic. Uncertainty has surrounded the sector since the country went into national lockdown in March and construction projects were put on hold. Despite many returning to work in mid-May, these were largely to drive completion on existing projects and to serve demand for refurbishments thwarted by COVID-19 restrictions.

The real question is now centred on the longer-term outlook and future new orders. The Autumn edition of the Construction Industry Scenarios report published this month by the Construction Products Association (CPA), anticipates a fall of 14.5% in 2020, with the private housing repair, maintenance and improvements sector declining at the same rate. However, in 2021, the sector as a whole is expected to rebound by 13.5%, and private RM&I by 14.3%, driven by an increase in property transactions, tempered by anticipated rising unemployment.

“An increase in home-based working has, anecdotally, led to higher improvements spending, particularly for garden and outdoor work,” explains Noble Francis, Economics Director at the CPA. “Once existing projects complete, however, uncertainty over near-term employment and incomes is likely to reduce consumer confidence, whilst early signs of a precautionary savings stance may also divert households further away from discretionary spending in the near-term.”

The underlying issues driving this multi-billion investment are undisputed. The English Housing Survey for 2018/19 showed that 70.9% of owner-occupied homes and 67.4% of those privately rented have an EPC rating below C. While, according to the UK Energy Research Centre (UKERC), at current rates, it will take 700 years for the UK to move to low-carbon heating, and at least 19,000 homes a week must be upgraded between now and 2050.

As the sector continues to rebuild under the COVID-19 cloud, a scheme that promises to support over 100,000 jobs and enable improvements to over 600,000 homes has to be one that deserves to be taken seriously. Despite a ‘hiatus’ in retrofit spending between its announcement and launch, the arrival of the Green Homes Grant has been largely welcomed across the sector. The issue of supply and demand, generated by the launch, clearly needs to be ironed out, with questions about how the scheme is structured and how it operates still to be answered. What’s more, the majority of the work underway in the scheme is work that was already in the pipeline, or has been brought forward, and it is extremely unlikely that the full £2 billion will be spent before April.

We would hope to see an extension of the scheme to see a positive and longer-term stimulus to the private RM&I sector next year, and a more substantial contribution to the green agenda. If this can be agreed, it will provide a boost to RM&I specialists, particularly businesses that specialise in windows and doors, insulation, and HVAC, operating both locally and nationally.

With the Green Homes Grant providing an incentive for homeowners, which in turn will create a stimulus for the sector, it is an important start which should be developed in a longer-term effort to address the overriding problem of cutting carbon emissions.


BDO’s Building Products & Services group plays a leading role in the industry, providing M&A, transaction services, business assurance, tax and business advisory services to manufacturers, distributors, retailers, and service businesses. BDO’s Building Products & Services sector team combines technical expertise and sector insight to provide clients with specialist advice and access to an extensive contact base in the mid-market.