The effect of government grants on the uptake rates of home insulation measures in the UK.

This paper examines historical data on Government expenditure on grants for home energy efficiency improvements, and the effect that this had on the uptake of insulation measures. The analysis focuses on loft insulation, this being the main measure that has been targeted by grant schemes. The paper shows that variations in loft insulation uptake between 197 4 and 1996 were closely tied to changes to grant schemes. Furthermore, there is a clear correlation between the uptake rate achieved and the level of funding provided by the Government. The results also indicate the extent of the effect whereby householders who would have installed the measure anyway take advantage of the availability of a grant (referred to as the "freerider" effect). The costs and savings of the loft insulation grants are assessed and it is shown that, even allowing for "free-riders'', the grant schemes were highly cost-effective.