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NAO lays bare admin flaws of green voucher scheme

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The Department of Business, Energy and Industrial Strategy (BEIS) was rebuked by the National Audit Office (NAO) for bungling the government’s Green Homes Grant Voucher Scheme.

10th Sep 2021
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According to the NAO, the Green Homes Grant Voucher Scheme ate up £314m of taxpayers’ money in less than a year, £50.5m of which was spent on administration costs. With an estimated 47,500 homes benefiting from the scheme, the admin cost alone ran to more than £1,000 per house.

As the NAO report makes clear, the department’s permanent secretary and principal accounting officer Sarah Munby played a key role in pushing the scheme forward in spite of ominous internal risk assessments and concerns raised by other parties.

In the words of the government auditor, the scheme was “delivered to an over-ambitious timetable and was not executed to an acceptable standard”. As a result, it failed to achieve its targets for either reducing carbon emissions or creating jobs during the pandemic.

The Green Homes Grant Voucher Scheme was part of the “green recovery” announced in July 2020 to “build back better” following the Covid-19 economic shock. The scheme was intended to offer homeowners up to £5,000 in funding (£10,000 for low-income households) to improve the energy efficiency of their homes.

The government announced a fund of £1.5bn to underwrite the voucher scheme. While helping up to 600,000 households upgrade their properties, the project was also intended to support 82,500 jobs in the sector. After a sequence of missed deadlines and non-functioning software, the department announced in November 2020 that the voucher scheme would close for applications in March 2021.

Impractical timetable

From the outset, however, the green voucher scheme’s whirlwind timetable put its success at risk. Interested parties were given three weeks to tender for the project after it was first announced on 8 July 2020, the NAO reported.

With less than 10 weeks before the planned 30 September opening date for applications, BEIS received bids from three contenders: Big Four accountant PwC, government outsourcing regular Capita and ICF, a US company.

With its rivals claiming they needed at least 15 weeks to get up and running, ICF said it could deliver in six and a half weeks for less money by adapting software it developed for other grant administration projects. By the time the contract was signed on 18 September, however, the project was already falling behind schedule.

The business case for the green vouchers was put in front of the BEIS project and investment committee on 28 September. When the internal watchdog rejected the business plan due to concerns that ICF had not developed nor tested its systems and the broader financial feasibility of the project, Mundy overruled it the next day in her role as BEIS accounting officer, the NAO reported.

Mundy, a former McKinsey consultant and previously director general of the BEIS business sectors unit, was made permanent secretary on 20 July 2020. She obviously didn’t win the promotion by coming across as the cautious candidate. Acknowledging the committee’s misgivings, she ploughed on regardless, citing how important the scheme was for the government’s post-pandemic plan for jobs.

In retrospect, Mundy’s answers to simple, practical points raised by the project oversight committee were an object lesson in sophistry and consultancy double-speak. Where committee members questioned whether ICF could deliver its software on time and to budget, the accounting officer said the low costs of the contract would deliver value for money even if its funding was not fully spent – and that the Treasury had indicated that funding for the scheme would be available into the next financial year.

She also pointed to assurances received on 28 September from the Government Digital Service (GDS) that ICF’s system was adequately secure and reliable. But she didn’t mention that GDS said it had not been able to examine elements of the software that had not yet been developed.

The voucher scheme did indeed open for applications in September, but in the absence of working software, these had to be processed by hand. The average time taken to process the first batch of voucher applications was 138 days. Out of 880 installers that had registered to take part in the scheme, only 248 had been approved by early November.

By then it was clear that ICF had not delivered the software as promised and BEIS officials started to withhold payments and demand that the contractor come up with a rectification plan to get back on schedule. By the time the department decided to close the scheme in March 2021, the processing system had still not been implemented. This meant that of the 169,012 voucher applications, the remaining 79% were also processed mainly by hand, using up most of the £320m that had been budgeted for the scheme in 2020.

In its defence, ICF told the NAO auditors that the complex system requirements had not been clearly defined from the outset and had changed from the specification presented at the procurement stage.

Failing to learn lessons

The government has a long and ignominious history both in botched IT projects and bungled energy efficiency schemes, the auditors noted. “While we recognise the desire to act quickly in the interests of delivering an economic stimulus, the government should be prepared to limit or delay the launch of a programme if the evidence suggests it is not ready.”

With typical restraint, the NAO report emphasised the need for BEIS and the Treasury to “heed the lessons from this, and previous schemes, for any future domestic decarbonisation programme”.

Meg Hillier, chair of the Commons Public Accounts Committee, was less forgiving in a comment to David Hencke’s Westminster Confidential blog: “The Green Homes Grant scheme was set up to fail, with an undeliverable timetable and overly complex design which took little account of supplier and homeowners’ needs…. Government cannot hope to achieve its net-zero ambitions if it doesn’t learn the lessons from this botched scheme.”

Replies (4)

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By codling
10th Sep 2021 08:59

"delivered to an over-ambitious timetable and was not executed to an acceptable standard"

Cue MTD4ITSA in due course!!

Thanks (2)
By ireallyshouldknowthisbut
10th Sep 2021 10:07

It was never a serious policy.

it was dreamt up "on the hoof" throw some money at a headline grabbing item and thrown down to others to deliver on an impossible timetable which career minded individuals bulled through at a political level as they mistake that for leadership.

The 'checks and balances' we have now are so weak as to be pointless.

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By a_q
10th Sep 2021 10:42

The voucher scheme is pointless anyway because you deduct the awarded voucher from your green homes grant after the installation is signed off. All it does (for the householder) is improve the cash flow.
Also, because the installers know the voucher is coming, they can inflate their installation prices accordingly, so the end effect is that the money goes to the installer company owners, who are free to drive around in flash cars and live up the high live, thereby completely negating the carbon savings that would have been realised.

(Finally, as an aside but a good accounting angle to it, the installer who quoted for my parent's house is trading through a dormant company, which to me seems slightly illegal. If you insist I'll name and shame!)

Thanks (1)
paddle steamer
By DJKL
14th Sep 2021 10:06

"In its defence, ICF told the NAO auditors that the complex system requirements had not been clearly defined from the outset and had changed from the specification presented at the procurement stage."

Presumably this is the stock defence to be used by contractors when dealing with HMG (And also the Scottish Government ), can government these days ever define what it wants, where do they learn project management, why do they keep issuing rose tinted glasses to their staff?

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