Home Upgrade Grant and Local Authority Delivery (HULA) schemes

Rating: Compared to financial year 23/24-Q4, the Infrastructure Project Authority's Delivery Confidence Assessment rating at 24/25-Q4 remained at AMBER. This is primarily due to the following factors‚ HULA completed delivery of its LAD schemes in 2023. LAD Phases 1 & 2, which were schemes for retrofit delivery through Local Authorities, concluded with 38,646 homes treated out of an original business case target of 55,000 and received an IPA green rating at closure. LAD Phase 3 completed delivery in September 2023, spending £221m of the £286.8m allocated to Local Authorities (LA) between December 2021 and January 2022. Several factors, including the high degree of optimism bias within LA forecasts, challenges identifying a sufficient pipeline of eligible homes, drop-out rates, cost-cap limitations and short delivery windows led to under-delivery of the LAD scheme, which was also affected by issues relating to supply chain capacity and access to properties resulting from the Covid19 Pandemic. Delivery of HULA’s HUG schemes will cease in September 2025 with the closure of HUG2. HUG1 completed delivery in September 2023, spending £61m of the £218.6m allocated to Local Authorities between Jan-April 2022. Under-delivery of scheme was due to several factors identified through monitoring and evaluation, including organisation level (expertise and capacity of each LA / consortium lead and their delivery partners), project level (ongoing optimism bias within LA forecasts, the time needed for LAs to procure and contract suppliers, the target measure mix’s alignment with local supply chains), and local external factors (customer appetite for measures offered, incidence of qualifying households, some off-gas grid housing stock being unsuitable for measures, and increased difficulty in delivering installations in rural / lower density areas). LAD3 and HUG1 (packaged together as Sustainable Warmth) received an amber/ green rating from IPA at closure. HUG2 has completed 24 months of delivery, issuing £240m against a budget allocation of £315m (GMPP baseline) and a Mid-Point Review forecast of £218m. HUG2, which is delivered via a Delivery Agent and Partner, has faced delivery challenges including identifying properties compliant with restrictive policy criteria (which included limits on private rented sector landlords and a 60% rural ringfence). Performance improved significantly in 24/25 following implementation of a ‘Maximising Delivery Strategy’. Delivery of over 11,000 homes is forecast by scheme-end, against a GMPP baseline of 12,602 and an MPR forecast (April 2024) of 8,721.

Schedule: Compared to financial year 23/24-Q4, the project's end-date at 24/25-Q4 increased from 31/03/2025 to 01/09/2025. This is primarily due to the following factors: Delivery ended on 30 March 2025. HUG2 project closure activity is underway with the final IPA review expected in September 2025. HULA will exit GMPP with HUG2 at this time and therefore the Q2 report (data date end September 2024 will be the last)

Cost: Compared to financial year 23/24-Q4, the project's departmentally agreed Whole Life Cost at 24/25-Q4 (measured in £m) remained at 1307. This is primarily due to the following factors‚ HULA has not re-baselined its Whole Life Cost since the last IPA Annual Report.

Source: NISTA Annual Report 2024-25 (data)

Rating: The Infrastructure Project Authority's Delivery Confidence Assessment rating at 23/24-Q4 is Amber. This is primarily due to the following factors. This project is amber because of under-delivery of LAD and HUG schemes. LAD Phase 1&2, which completed September 2022, spent 331m of its 500m budget (66%) and treated 38,646 homes of its 55,000 target. LAD Phase 3 allocated 286.8m in grants to Local Authorities and forecasts to spend 221m (77%). HUG Phase 1 allocated 218.6m to Local Authorities and forecasts to spend 61m (27%). HUG Phase 2 has 415m to allocate to Local Authorities and forecasts to spend 225m (54%). Under delivery has been due to the high degree of optimism bias in LA forecasts, challenges identifying a sufficient pipeline of eligible homes, drop-out rates and cost-cap limitations. A Delivery Agent/ Delivery Partner is now in place to support LAs in line with lessons learned. Policy revisions (including increasing the income threshold and simplifying cost caps) which come into effect on 2 April, will also help to unlock delivery.

Schedule: The project's end-date at 23/24-Q4 is 2025-03-31. This is primarily due to the following factors. This project end date is 31st March 2025 because, under the current scope of the HULA programme, delivery of all energy efficiency upgrades undertaken by Local Authorities and Local Net Zero Hubs using grant funding from HUG and LAD schemes will be complete by this date.

Cost: The project's departmental-agree Whole Life Cost at 23/24-Q4 is 1307m. This is primarily due to the following factors. The project's baseline Whole Life Cost is 1307m. The project issues capital grant funding to Local Authorities and Local Net Zero Hubs via Section 31 of the Local Government Act of 2003. Grant recipients then use these funds to upgrade the worst energy inefficient homes in England, for low-income households, to contribute to the Government's fuel poverty target, the net zero ambition and support green jobs. Funding allocation methods used have included: competition (LAD Phase 1 and 3 and HUG Phase 1), direct allocation (LAD Phase 2) and a challenge fund model (HUG Phase 2). The project's resource budgets are used to fund the DESNZ teams setting up and delivering the project as well as contracts with suppliers providing delivery, monitoring and evaluation services (e.g. Delivery Agent, Delivery Partner, Technical Assistance Facility).

Source: IPA Annual Report 2023-24 (data)