The government has axed a scheme for upgrading energy efficiency in public sector buildings. The Public Sector Decarbonisation Scheme (PSDS) delivered more than £2.5bn in its first three phases for measures such as heat pumps, solar panels, insulation and double glazing, with further funding of nearly £1bn recently announced. But the Department for Energy Security and Net Zero (DESNZ) has told Building Design that the scheme has been dropped after the spending review, leaving uncertainty about how upgrades will be funded when the current phase expires in 2028. Source: UK Government/FlickrEd Miliband’s Department for Energy Security and Net Zero is responsible for the scheme The department said it would set out plans for the period after 2028 in due course. In a post on LinkedIn, Dave Welkin, director of sustainability at Gleeds, said he had waited for the release of the spending review with a “sense of trepidation” and was unable to find mention of public sector decarbonisation when Treasury documents were released. “I hoped because it was already committed in the Budget that its omission wasn’t ominous,” he wrote. Yesterday, he was told by Salix Finance, the non-departmental public body that delivers funding for the scheme, that it was no longer being funded. It comes after the withdrawal of funding for the Low Carbon Skills Fund (LCSF) in May. According to the government’s website, PSDS and LCSF were intended to support the reduction of emissions from public sector buildings by 75% by 2037, compared to a 2017 baseline. “Neither LCSF or PSDS were perfect by any means, but they did provide a vital source of funding for local authorities, hospitals, schools and many other public sector organisations to save energy, carbon and money,” Welkin said. “PSDS has helped replace failed heating systems in schools, keeping students warm. It’s replaced roofs on hospitals, helping patients recover from illness. It’s replaced windows in our prisons, improving security and stopping drugs getting behind bars.” However, responding to Welkin’s post, Steve Connolly, chief executive at Arriba Technologies, a low carbon heating and cooling firm, said that the scheme was being “mismanaged” with a small number of professional services firms “scooping up disproportionately large grants for their clients”. The fourth phase of the scheme was confirmed last September, with allocations confirmed only last month. This latest phase, which covers the financial years between 2025/26 and 2027/28, saw the distribution of £940m across the country. A DESNZ spokesperson said: “Our settlement is about investing in Britain’s renewal to create energy security, sprint to clean power by 2030, encourage investment, create jobs and bring down bills for good. “We will deliver £1bn in current allocations of the Public Sector Decarbonisation Scheme until 2028 and, through Great British Energy, have invested in new rooftop solar power and renewable schemes to lower energy bills for schools and hospitals across the UK. “We want to build on this progress by incentivising the public sector to decarbonise, so they can reap the benefits in lower bills and emissions, sharing best practice across government and exploring the use of repayable finance, where appropriate.” A government assessment of phase 3a and 3b projects identified a number of issues with the scheme, including delays and cost inflation, with more than a tenth being abandoned subsequent to grants being offered. Stakeholders interviewed for the report also identified “difficulties in obtaining skilled contractors and equipment”, especially air source heat pumps. The first come first served approach to awarding funding was also said to be “encouraging applicants to opt for more straightforward projects” and “potentially undermining the achievement of PSDS objective by restricting the opportunity for larger [and] more complex measures which may have delivered greater carbon reduction benefits”. But the consensus among stakeholders and industry representatives interviewed for the report was that the scheme was “currently key to sustaining the existing UK heat pump market” and that it was “seen as vital in enabling many public sector organisations to invest in heat decarbonisation”.

Insights Learning to Lead in the Digital Age: The AI Readiness Reflection As the race to integrate generative AI accelerates, organizations face a dual challenge: fostering tech-savviness across teams while developing next-generation leadership competencies. These are critical to ensuring that “everyone” in the organization is prepared for continuous adaptation and change. This AI Readiness Reflection is designed to help you assess where your leaders stand today and identify the optimal path to build the digital knowledge, mindset, skills, and leadership capabilities required to thrive in the future. Take the assessment now to discover how your current practices align with AI maturity—and gain actionable insights tailored to your organization’s readiness level. To download the full report, tell us a bit about yourself. First Name * Last Name * Job Title * Organization * Business Email * Country * — Please Select — United States United Kingdom Afghanistan Aland Islands Albania Algeria American Samoa Andorra Angola Anguilla Antarctica Antigua and Barbuda Argentina Armenia Aruba Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belarus Belgium Belize Benin Bermuda Bhutan Bolivia Bosnia and Herzegovina Botswana Bouvet Island Brazil British Indian Ocean Territory Brunei Darussalam Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cape Verde Cayman Islands Central African Republic Chad Chile China Christmas Island Cocos (Keeling) Islands Colombia Comoros Congo Congo, The Democratic Republic of Cook Islands Costa Rica Cote d’Ivoire Croatia Cuba Cyprus Czech Republic Denmark Djibouti Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Falkland Islands (Malvinas) Faroe Islands Fiji Finland France French Guiana French Polynesia French Southern Territories Gabon Gambia Georgia Germany Ghana Gibraltar Greece Greenland Grenada Guadeloupe Guam Guatemala Guernsey Guinea Guinea-Bissau Guyana Haiti Heard Island and McDonald Islands Holy See (Vatican City State) Honduras Hong Kong Hungary Iceland India Indonesia Iran, Islamic Republic of Iraq Ireland Isle of Man Israel Italy Jamaica Japan Jersey Jordan Kazakhstan Kenya Kiribati Korea, Democratic People’s Republic Korea, Republic of Kuwait Kyrgyzstan Lao People’s Democratic Republic Latvia Lebanon Lesotho Liberia Libyan Arab Jamahiriya Liechtenstein Lithuania Luxembourg Macao Macedonia The Former Yugoslav Republic Madagascar Malawi Malaysia Maldives Mali Malta Marshall Islands Martinique Mauritania Mauritius Mayotte Mexico Micronesia, Federated States of Moldova, Republic of Monaco Mongolia Montenegro Montserrat Morocco Mozambique Myanmar Namibia Nauru Nepal Netherlands Netherlands Antilles New Caledonia New Zealand Nicaragua Niger Nigeria Niue Norfolk Island Northern Mariana Islands Norway Oman Pakistan Palau Palestinian Territory,Occupied Panama Papua New Guinea Paraguay Peru Philippines Pitcairn Poland Portugal Puerto Rico Qatar Reunion Romania Russian Federation Rwanda Saint Helena Saint Kitts and Nevis Saint Lucia Saint Pierre and Miquelon Saint Vincent and the Grenadines Samoa San Marino Sao Tome and Principe Saudi Arabia Senegal Serbia Serbia and Montenegro Seychelles Sierra Leone Singapore Slovakia Slovenia Solomon Islands Somalia South Africa South Georgia & Sandwich Islands Spain Sri Lanka Sudan Suriname Svalbard and Jan Mayen Swaziland Sweden Switzerland Syrian Arab Republic Taiwan Tajikistan Tanzania, United Republic of Thailand Timor-Leste Togo Tokelau Tonga Trinidad and Tobago Tunisia Turkey Turkmenistan Turks and Caicos Islands Tuvalu Uganda Ukraine United Arab Emirates United States Minor Outlying Islands Uruguay Uzbekistan Vanuatu Venezuela Viet Nam Virgin Islands, British Virgin Islands, U.S. Wallis and Futuna Western Sahara Yemen Zambia Zimbabwe I’m interested in a follow-up discussion By checking this box, you agree to receive emails and communications from Harvard Business Impact. To opt-out, please visit our Privacy Policy. Digital Intelligence Share this resource Share on LinkedIn Share on Facebook Share on X Share on WhatsApp Email this Page Connect with us Change isn’t easy, but we can help. Together we’ll create informed and inspired leaders ready to shape the future of your business. Contact us Latest Insights Strategic Alignment Harvard Business Publishing Unveils Harvard Business Impact as New Brand for Corporate Learning and Education Units Harvard Business Publishing announced the launch of Harvard Business Impact, a new brand identity for… Read more: Harvard Business Publishing Unveils Harvard Business Impact as New Brand for Corporate Learning and Education Units News Digital Intelligence Succeeding in the Digital Age: Why AI-First Leadership Is Essential While AI makes powerful operational efficiencies possible, it cannot yet replace the creativity, adaptability, and… Read more: Succeeding in the Digital Age: Why AI-First Leadership Is Essential Perspectives Digital Intelligence 4 Keys to AI-First Leadership: The New Imperative for Digital Transformation AI has become a defining force in reshaping industries and determining competitive advantage. To support… Read more: 4 Keys to AI-First Leadership: The New Imperative for Digital Transformation Infographic Talent Management Leadership Fitness Behavioral Assessment In our study, “Leadership Fitness: Developing the Capacity to See and Lead Differently Amid Complexity,”… Read more: Leadership Fitness Behavioral Assessment Job Aid The post Learning to Lead in the Digital Age: The AI Readiness Reflection appeared first on Harvard Business Impact.