Changes to the Green Homes Grant and Electric Car Grant: What it means for you

The government has made the shock decision to slash two popular green initiatives.

Chancellor Rishi Sunak unveiled Budget 2021 earlier this month, which included a raft of measures designed to help the UK tackle the economic impact of COVID-19. Despite much narrative around ‘building back better’, however, environmental concerns were only lightly touched upon, and it has since emerged that two of the government’s most popular green schemes – the Green Homes Grant and Plug-In car Grant – have been drastically reduced, or cut altogether. Here’s what you need to know.

The information provided was correct at the time of publication.  Some incentives and grants may no longer be available.

The Green Homes Grant in 2021

The much-promoted Green Homes Grant (GHG) was designed to help householders in England insulate their homes, with Sunak originally promising that some 600,000 homes in the country would be helped.

The scheme is now set to be scrapped by the end of March 2021, with new figures suggesting just 10% of those 600,000 homes were actually reached.

The government claims that households were reluctant to apply for the grant due to fears of catching COVID from contractors coming into their homes. However, installers in some parts of the country say they were overwhelmed with demand, while some have reported going out of business due to delays in government payments.

The £300m previously allocated for the GHG will now go into a programme administered by local authorities, targeted at lower income households. It’s not yet clear what that programme will look like.

The Plug-In Car Grant in 2021

As of 18 March 2021, the government has downsized the financial incentive package offered to electric vehicle owners, also known as the Plug-In Car Grant (PiCG).

Previously, buyers of EVs costing up to £50,000 were eligible for a payment of £3,000 towards the cost of the vehicle. That has now been reduced to £2,500, and will only be payable to those purchasing a vehicle up to the cost of £35,000. EVs over this amount won’t be eligible for the incentive.

The government says it’s made these changes to “reflect the greater range of affordable vehicles available”, and to help funding go further as more drivers make the switch to EVs.

Until this time last year, all electric cars were eligible for a £3,500 government grant. It was reduced by £500 and restricted to sub-£50,000 cars as part of the 2020 budget, at which point funding was said to have been secured to run the scheme until 2022-2023.

The cut is likely to be especially controversial, as it comes just a fortnight after the chancellor extended a generous implicit subsidy for drivers of petrol and diesels by freezing fuel duty.

Some EV makers, such as MG, have pledged to continue offering the full £3,000 discount on vehicles ordered before the end of the month as a gesture of goodwill to those that wanted to buy an EV with the previous grant amount in mind.

The bottom line

The changes to these popular green initiatives are disappointing, especially as previous government rhetoric had focused on the idea of ‘building back better’. The government has committed to bold climate targets in line with the Paris Agreement – targets which would be significantly bolstered by the likes of the GHG and previous PiCG. To achieve these goals it will be absolutely necessary that equally robust initiatives are introduced as a matter of priority.

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