DTI rethinks green home subsidies

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A programme of grants for households wanting to install solar panels and wind turbines has been suspended by the Department of Trade & Industry (DTI).

The chancellor gave the scheme an extra £6m in the Budget and the DTI now plans to relaunch the programme in May.

In March, the £600,000 cap for the month was allocated in the first one hour and 15 minutes.

The DTI said a rethink was needed because while it had allocated £7.2m so far, only £3m had been spent.

The extra £6m will take the budget for the scheme, known as the Low Carbon Buildings Programme, up to £18m.

Unprecedented demand

Trade and Industry Secretary Alistair Darling said: "There has been exceptional demand for grants under the Low Carbon Buildings Programme.

"We are backing it, but there have been problems in meeting that unprecedented demand."

One possible reason for the problems is that people are applying for the grants before they have received planning permission.

The Renewable Energy Association (REA), which has been meeting with the DTI to discuss the scheme, said many problems had been caused by the imposition of monthly caps on the payments.

Rush for grants

"Before the cap, allocations were running at about £700,000 a month," according to Graham Meeks from the REA.

"The cap just encourages a rush for grants on the first day of the month," he said.

The scheme at the moment gives householders nine months to spend the money after it is allocated.

Mr Meeks said the restructuring had to "look at what is a reasonable amount of time between the grant being awarded and the money being returned to the scheme".