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GDHIF cashback scheme closes due to massive demand

By Katie Anderson on July 29, 2014

A sudden rush to apply for Green Deal Home Improvement Fund vouchers has resulted in the Department of Energy and Climate Change (DECC) pulling the plug on its popular energy efficiency cashback scheme. Citing “overwhelming popular demand” as the reason behind their decision to close the scheme, which had seen the entire £120 million worth of funding swallowed up in under seven weeks. The announcement was made on Thursday 24th July with immediate effect.

The Green Deal Home Improvement Fund, usually shortened to GDHIF, was launched on 9th June and offered generous cashback incentives as a means of encouraging households to make energy saving home improvements. The second phase of Green Deal cashbacks allowed households to apply for up to £7,600 of funding, before dropping to £5,600 a week prior to the scheme’s sudden closure to future applications.

A feeding frenzy for applications in the last two days before the plug was pulled saw massive demand for vouchers, taking the value of vouchers applied for to £118 million. It was at this point DECC made the decision to close the doors on the cashback scheme.

According to the National Insulation Association (NIA), vouchers totaling around £68 million had been applied for in just two days. The level of activity certainly seems suspicious and rumour is rife that the surge could be down to companies buying up batches of vouchers on a speculative basis. Although DECC has confirmed that £50 million worth of vouchers have already been issued, it is unclear exactly how many of those vouchers have been cashed in towards carrying out energy efficient improvements. Vouchers are valid for a period of six months, which means it will be the end of the year before DECC can reveal how many of the applied for vouchers have actually been converted into actual energy efficiency measures.

Even before the scheme’s closure, members of the NIA claimed to have been contacted by companies keen to sell them vouchers. Speaking to Business Green, Neil Marshall, chief executive of the NIA, said: “In our view DECC now needs to urgently review and verify all applications received and identify households that are not going to redeem vouchers so that they can identify how much of the £120 million is not actually going to be spent and reopen the scheme as soon as possible.”

Unfortunately schemes like GDHIF are wide open for abuse from so-called rogue installers. And by all accounts firms have been cold-calling customers and offering inflated quotes with the aim of taking a profit from the vouchers. DECC has said that it will be monitoring conversion rates very closely. But it will do little to calm the storm brewing amongst the industry that dodgy GDHIF applications are to be blamed for bringing the scheme down.

In the meantime the industry is urged to report dishonest practices to DECC, who hope to have the results of an investigation into the sudden spike in GDHIF applications by mid August. Under Secretary of State for Climate Change Amber Rudd has contacted insulation and heating trade associations asking for their cooperation in the matter. Should further funds become available in the future, DECC may consider launching another cashback scheme.

For more information read the official press release from DECC about the closure of GDHIF applications.