Departments ‘don’t have resources to design effective net-zero policies’

Institute for Government says ministers must learn lessons from the debacle over the Green Homes Grant cancellation
The award-winning Goldsmith Street low-carbon housing development in Norwich, by Mikhail Riches with Cathy Hawley. Photo: Tim Crocker

By Jim Dunton

01 Apr 2021

Ministers will fail to achieve the government’s goal of making the UK a net-zero carbon-dioxide emissions economy by 2050 unless conflicting departmental priorities on domestic heating policy are resolved and funding is improved, the Institute for Government has said.

The think tank said the “debacle” surrounding last month’s cancellation of the Green Homes Grant – just nine months after its high-profile launch – underscored the need to properly align government energy policy across major departments. 

The IfG said decarbonising domestic heating, which accounts for 14% of emissions – most of which is from natural gas boilers, was essential for the wider net-zero target to be hit. But it said there was a policy trade-off between the Department for Business, Energy and Industrial Strategy and the Ministry of Housing, Communities and Local Government that sought to prioritise affordable housing above energy-efficiency measures.

The think-tank noted that in the wake of the Grenfell Tower tragedy MHCLG had created a new director-general post for net-zero and building safety. But it said there was no directorate covering  decarbonisation of the UK’s housing stock, which meant cross-cutting proposals with BEIS had to be co-ordinated by a central strategy team “covering the entirety of MHCLG’s brief”. 

It said one senior official at BEIS had bluntly admitted: “The relationship with MHCLG just isn’t there.”

Meanwhile, the IfG said the failure of the £1.5bn Green Homes Grant programme, which originally targeted the improvement of 600,000 homes by the end of last month, had “conflicting objectives of BEIS and the Treasury” at its root, coupled with an “exceptionally compressed” development period.

The government’s announcement that the Green Homes Grant would close to new applications on 31 March was slipped into an announcement on “increased funding” for energy efficiency measures  released by BEIS at the weekend. The department said the decision was taken “following a review” and that the scheme had been designed to create a “short-term economic boost”. It had, however, been due to run until March 2022. 

The Green Homes Grant offered vouchers worth up to £10,000 towards the cost of energy-efficiency improvement work such as solid-wall insulation, loft insulation, or the installation of low-carbon heating such as ground-source heat pumps or biomass boilers.

The IfG’s Decarbonising heating at home report calls for the Cabinet Office to take a “stronger grip from the centre” on net zero and to ensure that HM Treasury,  BEIS and MHCLG adequately prioritise net zero housing and work more effectively together.

“One promising model is an Office for Zero Carbon Buildings, similar to the Office for Zero Emission Vehicles,” report authors Will McDowall and Colm Britchfield said.

The report said decarbonising would be a massive challenge that was expected to come with a price tag that ran into hundreds of billions of pounds.

McDowall and Britchfield said the process would need to involve BEIS and MHCLG getting the resources they needed to manage the “growing scope” of policies.

“This means ensuring policy teams have enough people and money to oversee the successful piloting, monitoring and delivery,” they said. 

“The transition to net zero heating is expected to be expensive – around £200bn – and is likely to involve both large public spending and regulations that drive private sector investment. 

“The relatively small additional costs associated with well-resourced policy teams will be money well spent if they avoid the disappointing and costly policy failures of the past.”

Senior IfG researcher McDowall added that ministers probably had just a decade and a half to lay the ground for achieving the net-zero ambitions legislated for when Theresa May was prime minister. 

“There are probably three parliaments left to get much of the policy needed to reach net zero in place and working,” he said.

“Decarbonising heat is hugely difficult, but the government must do better than it has in the past. The civil servants we spoke to are focused on improving performance and learning from previous shortcomings. It is vital that everyone across government does so, starting with the publication of the repeatedly delayed Heat and Buildings Strategy.”

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