Public Sector Low Carbon Skills Fund
Grants for public bodies to hire specialist expertise to plan replacement of fossil-fuel heating and energy-efficiency improvements in their buildings.
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Phase 5 covered external specialist advice to create or expand a plan for replacing fossil-fuel heating in public buildings. Eligible work included a heat decarbonisation strategy, analysis of building data, building audits, feasibility studies, specialist site surveys, detailed analysis of energy and financial savings (investment grade audits), and technical design. The plan had to consider the whole building so that heating changes and energy-efficiency measures worked together.
The maximum Phase 5 grant was £1 million. It did not pay for equipment, existing full-time employees already funded from internal budgets, or appointing the contractor for manufacturing and construction. VAT was eligible only when it could not be reclaimed from HMRC.
The scheme page marks Phase 5 closed. Government announced no Low Carbon Skills Fund funding for financial year 2025–26. The terms below describe the historical Phase 5 offer.
Eligibility
Phase 5 was open to contracting authorities in England under the Public Contracts Regulations 2015 and analogous organisations established for public benefit. Eligible groups included central-government departments and agencies, emergency services, further and higher education institutions, local authorities, state schools (including academies, multi-academy trusts and free schools), local-authority nursery schools, and NHS Trusts and Foundation Trusts. Departments with reserved rather than devolved functions, such as the Ministry of Justice and Ministry of Defence, could use funding for estates anywhere in the UK.
Public corporations, private-sector organisations and social housing were excluded. Registered charities qualified only if they were also Cabinet Office-defined non-departmental public bodies. A local authority or government body could apply for schools within its remit. Eligible bodies could apply jointly through an agreed lead applicant, but an organisation could take part in only one application, including as a consortium member; only its first submitted application was assessed.
- Buildings had to have fossil-fuel heating and be owned by the applicant or occupied under a long-term lease. A lease was normally expected to have at least 20 years remaining. With less time left, applicants could demonstrate the intention and opportunity to occupy the building for at least 20 years, or justify a shorter period that still allowed installation and benefit throughout the measures’ lifetime. If a private-sector organisation was the landlord or tenant, it could not be responsible for funding the decarbonisation work under the lease.
- Feasibility studies, specialist site surveys, investment grade audits and detailed designs required each building to have at least one end-of-life heating system: older than 10 years, or demonstrably at the end of its useful life earlier than normally expected. Strategy development, desktop assessments and building audits did not have that heating-age test.
- Applications starting beyond the strategy stage needed the latest plan or relevant completed earlier work to demonstrate readiness. Design-only applications needed an existing feasibility study proving that the proposed heating measure was feasible. Technologies found infeasible could not progress to detailed design.
- Detailed designs had to reach RIBA Stage 4, the technical-design stage with specifications and drawings sufficient to manufacture and construct the heating project. Completion evidence included heat-loss and sizing calculations, technical surveys, data sheets and detailed drawings and schematics with proposed flow and return temperatures. Network-operator engagement, submitting planning permission and preparing a project programme, cost plan and risk register were beneficial but were not essential elements of those designs.
- Work had to be additional: not already begun, not already funded elsewhere, and unlikely to happen without the grant in Salix’s reasonable opinion. It could not be undertaken for commercial gain apart from energy-cost savings. Legally required work was excluded, but the increased cost of going beyond the legal minimum could qualify. Updating an existing plan had to expand its scope or detail; changes to a site or additional work could also qualify.
- Applicants had to show value for money, provide a cost breakdown and project programme, and explain the activities and timings. Public bodies offering goods or services on a market had to consider their economic activity in the application and cooperate with Salix on subsidy control. The economic-actor terms made receipt of the Minimal Financial Assistance Exemption declaration in the grant letter a condition of funding.
How to apply
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- Historical Phase 5 round; funded projects had to complete by 31 March 2025.[^c18]
Phase 5 is closed. Use Salix Finance’s scheme page for the retained guidance and official scheme updates.
In that round, the public body itself had to review, sign off and submit the completed application form and supporting information through Salix’s application portal. Consultants could help prepare it but could not submit it. The Authorising Official had to authorise assessment by email within three working days; clarification evidence also had to be returned within three working days or the application was unsuccessful.
After an award, the Authorising Official had ten working days to sign and return the grant offer letter. Funding could not be claimed for work completed before that signature and return. Projects had to complete by 31 March 2025.
Recipients had to provide quarterly monitoring reports, complete scheme surveys by their deadlines and ensure contractors carried professional indemnity insurance. They had to retain invoices and relevant completion certificates for audit. Once the grant was fully spent, a final report was required; completed plans or designs were due on the grant end date and subject to Salix’s completion check and any necessary amendments.
Payments reimbursed completed work with evidence, in at most two instalments. Recipients had to forecast a claim two months ahead, send a signed payment request and supporting documents, and satisfy their grant-letter conditions. The grant terms also required a completed request at least 21 business days before the proposed payment date. Outputs below the required standard could cause payment to be withheld until corrected.
Any change to the grant’s purpose needed Salix’s prior written agreement. Underspend after contract award had to be reported immediately for a grant amendment, and recipients funded any overspend themselves. Unspent funds or savings against forecast costs had to be returned unless Salix agreed otherwise in writing. Other public-sector or European funding for the same purpose needed prior written consent; duplicate funding, misuse and failures to meet output or grant conditions could lead to reduced, withheld or recovered funding. Subsidy-control breaches could require repayment with interest.
Recipients had to keep grant expenditure documents for at least six years after the grant end date and ensure subcontractors retained their related records for the same period. Salix could inspect and copy the records.