Government to offer homeowners £5,000 vouchers for energy efficiency upgrades

The government has enacted the first step of its manifesto commitment to boost energy efficiency with a scheme to revive home insulation grants for homeowners.

The Treasury revealed last night that the summer economic update, which will be announced by chancellor of the exchequer Rishi Sunak tomorrow, will include £3 billion of investment for environmental measures as part of a broader package to revive the economy following the coronavirus pandemic.

The biggest chunk of the package – £2 billion – is due to be earmarked for a Green Homes Grant. This will offer vouchers worth up to £5,000 to help homeowners to improve their property’s energy efficiency, with a higher ceiling of £10,000 for poorer households.

Business and energy Alok Sharma told Radio 4’s Today programme this morning (7 July) that the grants will cover two thirds of the cost of most households’ energy efficiency projects and “100 per cent” for those on the lowest incomes.

He said the scheme will be launched in September when homeowners can start making online applications for recommended energy efficiency measures.

Tomorrows’ announcement is also expected to include a £1 billion programme to improve the energy efficiency of public buildings, including schools, hospitals and social housing.

And Sunak will unveil £50 million to pilot innovative approaches to retrofitting social housing at scale, through measures like heat pumps, insulation and double glazing.

Claiming that the scheme will generate 130,000 jobs, Sharma said: “Ultimately this is a policy that is about putting money in peoples’ pockets. It’s good for jobs and ultimately very good for the environment.”

More details of the package will be outlined in tomorrow’s statement by the chancellor.

The news that measures to boost energy efficiency will feature in the summer update follows recent reports that No. 10 Downing Street’s chief advisor Dominic Cummings had tried to block extra investment in this area because it is “boring”.

In its manifesto for last December’s general election, the Conservative party pledged to spend £9.2 billion on energy efficiency improvements over the lifetime of the current parliament.

Government grants for home insulation, which were introduced by the last Labour government, were scrapped after the 2010 general election when they were replaced by the coalition’s ultimately botched Green Deal loans programme.

Industry bodies said the £3 billion package appears to be a good first step to delivering the government’s net zero ambitions but must be part of a longer-term programme.

Emma Pinchbeck, chief executive of Energy UK, said: “£3 billion is a good start and we look forward to seeing how the government will meet the rest of the energy efficiency spending commitments outlined in their manifesto.

“We need to build on this momentum and look forward to working in partnership with government as the energy industry stands ready to build further on the £14 billion it already invests every year. We need to give both the economic recovery and the climate crisis everything we’ve got.”

Rain Newton-Smith, CBI chief economist, said: “This £3 billion package of measures will undoubtably fast-forward progress towards net-zero. With the government’s own manifesto promising £9.2 billion on energy efficiency alone, we look forward to seeing the full details on delivery of its ambition to build back greener.”

Nina Skorupska, chief executive of the REA (Association for Renewable Energy and Clean Technology) said: “Today’s announcement from government lays the foundations for a successful Green Recovery by prioritising energy efficiency, funding social housing retrofits and emphasising the need for green jobs, but the financial aid is woefully inadequate.

“If this is a one-off investment of £3 billion then it falls short; it is not enough to stimulate the economy on the scale needed or make a dent in our net zero by 2050 targets.

“We hope that the chancellor will be building on this announcement tomorrow in his economic update and this is just the first in a series of funding rounds for the green housing and employment sectors.”