Home Upgrades Grant (HUG)

**Please note this is an Award Notice not a call for competition** This contract has been awarded via Energy and Climate Change Behavioural Science Framework Agreement. Reference: CR20116.

Background The Home Upgrade Grant (HUG) is a £2.5 billion manifesto commitment that aims to provide energy efficiency upgrades and low-carbon heating to low-income households living in the least energy-efficient off-gas homes1 in England, to tackle fuel poverty and meet net zero. An initial £150 million was allocated to HUG in Spending Review 2020. This funding is being delivered via local authorities, commencing in early 2022 and delivering to March 2023, and is being allocated to local authorities as part of the Sustainable Warmth competition alongside Phase 3 of the Local Authority Delivery scheme. Future multi-year funding for HUG is subject to future fiscal events.

For the £150 million HUG scheme, the grants available will be between £10,000 and £25,000 depending on homes' starting EPC bands and starting heating fuel types. Eligible owner-occupier households will receive a 100% grant for the cost of eligible upgrades. Landlords of eligible tenants, however, will need to make a financial contribution to the cost of upgrades of at least one third, with the remaining costs provided by HUG. Upgrades made through HUG will typically include 'fabric first' measures (insulation and draught-proofing) in combination with heat pump installations to make homes thermally efficient and suitable for our net zero future.

Using fuel poverty statistics, BEIS statisticians estimate there are around 800,000 homes that meet the HUG criteria of: low-income, EPC D-G, owner-occupied or privately rented, in England, and off-gas grid. Around half of these homes are heated with electric heating, and the other half with fossil fuel heating (such as oil, coal, or liquid petroleum gas). Those homes heated with fossil fuels will be the target of forthcoming off-gas grid regulations to mandate the replacement of fossil fuel boilers with low-carbon alternatives from 2026. The HUG scheme will therefore serve as an enabler for those heat regulations, priming the supply chain and ensuring a higher number of low-income households receive the support they need to transition to clean heat to meet the new requirements, which they would otherwise not be able to afford. For the HUG scheme to achieve its target of upgrading 250,000 homes, it would need approximately 30% of households in the eligible pool to sign up to the scheme; this will be challenging (for context, the Energy Company Obligation has a roughly 10% conversion rate of approached households). We are therefore interested in key barriers to scheme uptake (particularly low-carbon heating uptake), and how our policy might be refined to overcome these barriers.