‘Green Deal or No Deal’

I had an interesting visit to the Northern Home Show at the Trafford Centre on Friday (14th June).  I was part of a ‘Green Deal or No Deal’ panel – putting the arguments for and against the Government’s programme.

It is a sobering thought that energy prices went up 6-10.8% last financial year and that there’s been an average increase of £300 per year on household bills since 2010.  Fuel poverty has markedly increased from around one fifth of households to one quarter, with 300,000 more people expected to be in fuel poverty this year and 9 million by 2016.

This is why energy efficiency is so important.  Under the previous Labour Government Warm Front increased energy efficiency in 2.16m households.  However I believe that the Green Deal and the Energy Company Obligations which replace it are a bad deal for both consumers and suppliers.

The Green Deal involves providing loans to householders to undertake energy efficiency work such as replacement windows, loft and cavity wall insulation.  For consumers there are issues about access, assessments and costs; and furthermore, the Green Deal currently only covers half the number of households covered by Warm Front.

For the first time since the 1970s there is no Government-supported energy efficiency scheme which is likely to have a knock-on impact on fuel poverty.  Some Green Deal assessors are charging £100 or more for an up-front assessment fee, which again in today’s climate will deter vulnerable households from getting access to the scheme. 

Anecdotal evidence suggests it is a very inefficient process which fails to meet the needs of different housing types. One constituent who contacted me told me she has sought an assessment for the Green Deal, but due to Green Deal software being unable to deal with a cavity wall issue, she cannot receive an Energy Performance Certificate and proceed with energy efficiency measures.

In addition, the costs associated with financing the Green Deal are also punitive starting at 7%.  A typical £10,000 loan over 25 years at 7.5% interest will cost over £22,000 – and there are penalties if you try and pay back early. Someone wanting to move house after 7 years will have a fine of over £7,000.

The Green Deal appears to be having an impact on the housing market too. A recent survey by the Great British Refurb Campaign indicates that 41% of people would not purchase a home with a Green Deal loan attached to it.

To date, the Government is not publishing how many people have taken up the Green Deal loan. Speaking to some officers from a Lancashire-based council after the panel, they said there have been lots of assessments but the Government has no plan as to how they can take the Green Deal forward. There has already been a 97% reduction in the installation of cavity wall insulation.

The effect on suppliers is hitting an already devastated construction industry. Some large construction companies are saying their order books are down by over a third, so the impact on small or micro businesses will be even harder.

Some other speakers charged with implementing the Green Deal, said it was ‘the only show in town’ as far as improving energy efficiency is concerned – hardly a ringing endorsement.

Labour wants to see a fair, efficient and affordable Green Deal with no up-front assessment fee, no penalties for early pay-back and effectively administered. We also want to extend Warm Front so that the whole budget is used to protect households at risk of fuel poverty and not just passed back to the Treasury.

Finally we want real commitment to developing green industries. An independent analysis by Bloomberg New Energy Finance shows investment in renewable energy has dramatically fallen since 2010. Ernst & Young say the UK is missing out on being the ‘market of choice for investment in renewables’ as political infighting in Government slows the passage of urgently needed reforms to the energy market.

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