In a statement released by DECC on Thursday, the fund was closed with immediate effect due to “overwhelming popular demand”.

According to DECC, the £120m limit of vouchers was reached just two days after it announced a reduction in the amount of cashback applicants could claim as the scheme had reached its £50m applications benchmark.

The statement said that all applications received prior to the fund closing that meet the eligibility criteria will be honoured at the issued rates.

Energy and climate change minister Amber Rudd said: “The Green Deal Home Improvement Fund is a world first and in a short space of time it has proved extremely popular.

“We were always clear there was a budget which is why we encouraged people to act quickly. As a result, thousands more families will now benefit from Government help to have warmer homes which use less energy.”

The announcement comes just two days after the level of funding that could be applied for was cut from £7,600 to £5,600. On Tuesday (22 July), the Government announced that more than £50m worth of vouchers for the fund had been applied for, with 7,925 households in England and Wales receiving funding under the scheme.

The Home Improvement Fund, which was launched in June, guaranteed £120m worth of funds as an incentive for households to install energy efficiency measures, such as solid wall insulation, double glazing or flue gas heat recovery units.

The sudden surge in the popularity of the scheme appears to have taken ministers by surprise and its abrupt closure has been met with dismay by members of the construction and energy-efficiency industries.

UK Green Building Council policy and public affairs officer Richard Twinn said: “The sudden and immediate closure of this fund is another setback for the energy-efficiency industry because companies have specifically geared up to market and deliver through this scheme.

“These constant changes are not helpful to industry. We now need urgent clarity as to whether Government will bring forward any more money to ensure continuity of Green Deal work.

“This does demonstrate that we need long-term drivers, not short term pots of cash to avoid this continual cycle of boom and bust.”

Matt Field

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