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Government officially launches Green Deal

Government officially launches Green Deal

Today (28 January), the Coalition Government officially launched its home improvement energy-efficiency scheme, the Green Deal, in the hopes of ‘transforming Britain’s homes’.

Under the scheme, householders and businesses can take out loans to make 45 different types of adjustments to their property, such as installing double-glazing, insulation and new heating systems, with repayment taken through the property’s electricity bill rather than through individuals.

It is hoped that these improvements will reduce the effects of ‘leaky buildings’ (thought to be responsible for 38 per cent of the UK’s greenhouse gas emissions), cut electricity bills and pass the ‘golden rule’ of making financial savings equal to or greater than the costs attached to the energy bill.

Edward Davey

Speaking on the launch of the Green Deal, Edward Davey, Energy and Climate Change Secretary, said: “More andmore families are being hit by the rising cost of fuel bills and the best way people can protect themselves from increased costs is to use less energy. This is where the Green Deal comes in, giving people a whole new way to pay for energy saving home improvements.”

Assessment costs

Households and businesses applying to the Green Deal will first have their property assessed by a Green Deal Assessor, who will recommend which appropriate improvements can be made, if any. Green Deal Providers will then quote for the improvements, which will be carried out by a Green Deal Installer. 

However, despite claims that there will be ‘no upfront costs’, a spokesperson for DECC told Resource that householders could have to pay for assessments.

He said: “It’s up to assessors what they want to charge and at the moment a lot of them are charging. Most of them say that if people do go on to take out a Green Deal loan that they will waive the charge, but yes, there is a possibility of an assessment cost.

“The DECC have put the framework in place, but it’s a market scheme. If assessors aren’t getting business because people are put off by the cost then it would be in their interest to start bringing the fees down.”

The spokesperson added that there have been some anecdotal suggestions that a few assessors could offer free assessments while some assessments could cost as much as £150.

Under the Green Deal, householders could also receive packages worth over £1,000 from the £125 million Green Deal Cashback Scheme; the more work a property owner has done, the more cashback they will be awarded.

Job creation

The government hopes that as well as improving the energy efficiency of British homes and businesses, the Green Deal will also create employment, supporting up to 60,000 jobs in the insulation sector by 2015, up from 26,000 in 2011.

Greg BarkerEnergy and Climate Change Minister Greg Barker, said: “The Green Deal will transform the energy-efficiency market and puts consumers in charge. It’s a fantastic new scheme that will allow people to make their homes warmer and save energy at the same time.

“And it’s not just consumers who will benefit. The Green Deal is also great for business, creating a new market and new jobs. I’m truly excited about the potential the Green Deal has to transform Britain’s buildings.”

Deputy Prime Minister Nick Clegg added: “The Green Deal will help thousands of homes stay warm for less. Those people will benefit from energy-saving improvements – and their energy bills will fall.

“The UK green sector is a success story – it is the sixth largest in the world and has a crucial part to play in building a strong economy. The Green Deal will support thousands of jobs – not just over the next few years, but in the long-term.”

Criticisms

The Green Deal has been met with criticism since it was first launched in 2011, with Shadow Energy Minister Luciana Berger calling the scheme a ‘shambles’ after Greg Barker admitted in November 2012 that no households had applied for an energy-efficiency loan, despite applications being available since the start of October.

Indeed, last week the Telegraph newspaper reported that to date only five people have signed up for the loans, and research published by energy comparison company uSwitch suggested that only 19 per cent of people have heard of the scheme.

Ann Robinson, Director of Consumer Policy at uSwitch.com said: “The Green Deal has the potential to help consumers afford energy against a backdrop of escalating fuel bills. Our surveys tell us that many people simply do not know how to make their homes more energy efficient. They also need assurance about the quality of any work done, and help with funding.”

Further criticisms of the scheme include: fears over property saleability (as loans are attached to household energy bills rather than individuals); the long repayment periods of 25 years; and ‘inflated’ interest rates of 9.26 per cent.

Speaking of the Green Deal, Andrew Pendleton, Head of Campaigns at Friends of the Earth, said that though it is ‘a great idea’, it is ‘undermined by significant flaws’. 

He said: “The interest rate on loans is bound to undermine the Green Deal’s appeal to cash-strapped households. Bolder government action is needed to help those really struggling to heat their homes – recent cuts to insulation programmes must be reversed.”

Toby Darbyshire, founder and CEO of residential solar systems provider Engensa, added: “It is hard for those in Whitehall to really get a grip of what the individual consumer wants from home energy and how they buy – particularly with the prospect of a triple dip recession around the corner… We know what people want: simplicity, flexibility and low cost. The Green Deal delivers none of these.”

‘Green Deal with it’

In order to raise awareness of the scheme, the government has now launched a communications campaign, ‘Green Deal with it’, to promote the loan scheme and Bristol-based charity, the Centre for Sustainable Energy, has published a new guide to help groups promote the deal in their areas.

Read more about the Green Deal.