Bad news for fighting Climate Change: How Whitehall bungled first Green home insulation scheme

Sarah Munby, permanent secretary, BEIS, clearly not to up to the job over this

In a few weeks time Britain will be playing a pivotal role by hosting the Cop 26 international climate change conference in Glasgow.

Tight targets are going to be set which if not met will mean even more dramatic weather catastrophes than we are seeing now as the planet warms up.

So is Whitehall up to the job? If one takes the first example of action to save energy the answer is a resounding no.

A damning National Audit Office reveals an extraordinary poor performance by BEIS – the business and energy ministry – in getting 600,000 homes – mainly owned by low income families updated with new home insulation to cut their fuel bills and save energy.

The Treasury had earmarked £1.5 billion. The ministry ended up spending only £314 million. Its 600,000 homes target was missed by over 550,000. The administration costs were astronomical – for a scheme that provided grants of up to £5000 or £10,000 for low income income families – it cost over £1000 per house. Instead of of 600,000 saving up to £600 a year in fuel bills – only 47,500 will benefit.

And it should have provided a much needed job boost providing work for 82,500 people during a time when work was in short supply Instead it created just 5,600 jobs before the scheme was closed down last March.

Worse still both customers and contractors were badly treated. Delays paying contractors and customers getting their vouchers led to over 3000 complaints.

Why Sarah Munby is to blame for this fiasco

Who is to blame for such a mess? The answer must lie with the permanent secretary, Sarah Mundy. She is supposed to be this new business friendly appointment bought into government by the Tories to shake up Whitehall. Her biog on the gov.uk website said: “Sarah joined BEIS in July 2019 as Director General, Business Sectors. Before that, Sarah worked at Mckinsey, where she led their Strategy and Corporate Finance practice in the UK and Ireland.

“She has worked with some of the UK’s largest companies to change their strategic direction, and led much of McKinsey’s work on productivity across the UK economy.”

But she in no way lived up to her billing. To be fair HM Treasury gave the Department an over-ambitious 12-week timescale to design the scheme, consult with stakeholders and procure an administrator.

This came at a time when the Department was supporting vaccine procurement, and undertaking activities related to EU Exit. The Department accepted that delivering the scheme within this timescale posed a high risk, but judged it was justified by the need to support businesses in the wake of the COVID-19 pandemic.

A US global company’s cheapskate bid

But it is at the back of the NAO report that her real failings show up. She was obviously entranced by business to use a new state of the art digital voucher system and gave the contract to ICF, a US global consulting and technology company, based in Fairfax, Virginia. The report reveals they put in a cheapskate bid. Their technology was not up to the job as shown by repeated reviews of failures in the digital voucher scheme. This led to the scheme having to managed manually- which is why it cost £1000 per house.

The NAO said: “ICF’s proposed costs for the development of the digital solution were less than half that of the second cheapest bidder, triggering the need for a review under government contracting guidance. The Cabinet Office review concluded there was not enough information within the bids to understand specific costs, and thus whether any adjustment should be made for a low bid.”

But it came back to Sarah Munby. She ignored the Cabinet Office. Having chosen the contractor she was then warned by every single contractor asked to undertake the work that it couldn’t be done in time. But she still went ahead.

Whitehall sceptics ignored

And the same came from inside Whitehall. The Department presented the Scheme’s full business case to its Project and Investment Committee on the 28 September, ahead of the Scheme’s final approval for launch on 30 September last year. The Committee decided not to approve the full business case, raising concerns that the digital systems for the Scheme were not yet fully developed and tested. They were right but still she ignored them and went ahead. Within six months it had to be abandoned and it is largely her fault. As a result hundreds of thousands low income families have lost the chance of cutting their energy bills this winter.

One can only agree with the verdict of Meg Hillier, chair of the Commons Public Accounts Committee.

“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.”