The Tories have ended the Green Deal Finance initiative—what does that mean?
Last Thursday, 23rd July, the Department of Energy and Climate Change announced it was ending funding for the Green Deal Finance Company. In a press release it cited the low take-up of finance, and concerns about industry standards for this. Those familiar with the Green Deal knew it was poorly constructed and has been beset by issues since its launch, so news it is going is not altogether unwelcome. The problem is there is nothing to take its place. Nor were most of the individuals and organizations affected by the decision consulted—instead they found out through the press.
For those of you unfamiliar with the seemingly elusive Green Deal Finance initiative may be wondering what on Earth it is? Well, it’s a rather convoluted way of providing financing for people to get energy improvement measures installed on their homes. A report is done, recommending different measures that shows the potential cost savings. The measure is then installed and a loan given against the property (meaning it is passed on to subsequent owners and doesn’t stay with the person initially installing the measure), which is repaid through the savings made on the energy bill as a result of the installation. For the homeowner, their energy bills will appear to stay the same, but will drop dramatically once the loan has been repaid. But the Green Deal has been unpopular for several reasons.
There is a perception amongst some that the finance detracts from the value of the property, a new owner not wanting to inherit a financial agreement they did not themselves enter into. There are also the concerns mentioned in the DECC press release around the industry. A Which? Report looking into Green Deal highlighted that it was time consuming, confusing and questioned the understanding and knowledge of some assessors. Whether this is a few rogue assessors, or a common experience, it indicates the process isn’t working out and needs to be investigated further. There is also the fact that the interest being charged on the loans of around 5% put people off. By comparison, far more successful schemes, such as the Energy Company Obligation and the Renewable Heat Incentive bring about seemingly greater benefits for those who have access to them compared to the Green Deal.
So having established that Green Deal Finance probably isn’t the solution we want, why am I so furious about the announcement on Thursday? Because we have the least energy efficient homes in Europe. Our housing stock is a great big energy-wasting nightmare and rather than knocking them down and replacing them with new ones (which is extremely wasteful and unnecessary) we should be making a concerted effort to address this issue. Something radical needs to be done, but the current Government appears to be doing the complete opposite. Talk of needing to reduce carbon is overshadowed by the prospect of the profit to be found in fracking and untapped reserves. Instead of creating jobs under a scheme like the Green Party’s pledge to insulate 9 million homes, thousands of assessors and small businesses that have structured themselves around the very arduous and bureaucratic requirements associated with Green Deal Finance will be left wondering what they can do next. And little heed seems to have been paid, by the Green Deal or its kin (ECO, RHI) to the value of making our homes more energy efficient beyond the financial. Until we start to value the future of our planet as much as we value the numbers in our bank accounts, the climate crisis is one we will never tackle.
A hardly discussed concern of this is no one was consulted. I work with the Green Deal (albeit not directly) and it was with some surprise that I fielded a call from an extremely concerned assessor asking what would be happening now that the Green Deal had been cancelled. I had no idea, could offer no advice and sat in shocked silence when I realised he had not misunderstood something. No thought seems to have been given to the thousands of people this will affect. Certainly not enough to think to ask them about what could be done to improve the scheme. Amber Rudd in the DECC press release said that it was “now time for the building industry and consumer groups to work with us (DECC) to make new policy and build a system that works”, but did not deem it appropriate to discuss this with the people that had been doing it for the last 2 years.
The schemes that remain are either targeted at households in receipt of benefits (ECO) or take the form of shifting the issue rather than really addressing it, as with the very successful RHI scheme which encourages people to use bio-fuels—contentious and damaging in their own ways. Whilst these are both better than nothing, it’s simply not enough. It highlights sharply that the market approach to addressing our energy efficiency and creation is not working. The Conservative government in its current incarnation appears hell bent on making our government as small as possible. But when faced with an issue as present and desperate as climate change we need big, bold ideas and solutions. Timidity and discussions about the pros and cons of libertarianism aren’t really going to wash for the future generations left to deal with the mess they have to clear up, created by our refusal to act.
The Green Party’s bold plans—championed by the ever awesome Caroline Lucas and laid out in the 2015 manifesto—to insulate 9 million homes over the course of the parliament, lifting at least double the number of households out of fuel poverty than the current offering (the current target is 1 million homes over the course of this parliament, which given the topic of this piece is looking even less likely) was exactly the kind of approach that is required. By offering to retrofit for free that number of homes there would also be job creation, reducing the burden of out of work welfare payments. This job creation would be distributed across the country—improving the lives of thousands and hopefully improving the prospects for communities across the country. This should not be our main driver, but it’s a fantastic benefit that needs to be highlighted.
A decent replacement for the Green Deal Finance initiative could do lots of great things, but the Tories aren’t interested in that.
Jennifer Marklew is a member of the Milton Keynes Green Party.
Those familiar with the Green Deal knew it was poorly constructed and has been beset by issues since its launch…………..Well, it’s a rather convoluted way of providing financing for people to get energy improvement measures installed on their homes
This seems to be the prevailing myth about the Green Deal.
In fact, it’s not convoluted at all. It’s very simple. As you say, a report is done which identifies potential savings on annual energy costs for a property. By installing those measures the bill payer in the property will therefore gain additional disposable income, and consequentally will have that income available to repay a loan. A simple calculation then determines the maximum value of that loan – which in turn can be compared to the cost of the energy improvement measures to see if it/they are self-financing.
There is a perception amongst some that the finance detracts from the value of the property,
This is a common statement being made but with no evidence to back it up. Again, this is a marketing problem. After all, the fundamental idea behind the Green Deal is that it is self-financing – so any purported devaluation of the property due to the loan should be equally matched by an increase in value of the property due to the improvement having been installed. In simple terms, new double glazing will put an extra £x000 on to the value of the property, and this extra money could be used by the vendor to pay off the loan before the sale is completed.
By comparison, far more successful schemes, such as the Energy Company Obligation and the Renewable Heat Incentive bring about seemingly greater benefits for those who have access to them compared to the Green Deal.
Well, of course they’re far more successful – those are (effectively) Grants. Who wouldn’t prefer to be handed money rather than being lent it?
The real problem with the Green Deal is one of marketing. The Tories (even though they introduced it) didn’t like it because they’re wary of anything with the word Green attached to it. The Left (and particularly the Greens) didn’t push it because they have an ideological attachment to subsidies for Green improvements.
The truth of this can be seen by the fact that there are a number of companies in the Solar Energy market who operate exactly in the way the Green Deal does – ie by arranging loans for the installation of solar panels which are paid for by the combination of energy savings and FiT payments the panels attract.
There may have been problems with the quality of the assessments – but this is a matter for improved training and/or regulation rather than a reason to cancel the scheme.
As a Green Deal Assessor, with family links with other assessors, a GDAO and GD installer, we have essentially had an entire generation of the immediate family forced to dramatically redesign our businesses and facing huge concerns over where our income will come from.
No consultation, no consideration and completely against “working people” that the tories claim to be in favour of.
It’s HIPs all over again, and they need to replace the system quickly and with something that utilises those who have already invested in Green Deal training without forcing them to outlay yet more in order to ressurect their businesses.
I have seen so many households in varying degrees of fuel poverty benefit from GD finance and especially the GDHIF, and had assessments lined up for yet more that are in a similar situation but due to the reductions in ECO payments, can only afford to have broken, leaking and inefficient boilers replaced if they can top up with a little bit of GD Finance – now they will be living in the cold, getting ill and staying in a vicious cycle.
As a Green Deal Assessor, with family links with other assessors, a GDAO and GD installer, we have essentially had an entire generation of the immediate family forced to dramatically redesign our businesses and facing huge concerns over where our income will come from.
No consultation, no consideration and completely against “working people” that the tories claim to be in favour of.
It’s HIPs all over again, and they need to replace the system quickly and with something that utilises those who have already invested in Green Deal training without forcing them to outlay yet more in order to ressurect their businesses.
I have seen so many households in varying degrees of fuel poverty benefit from GD finance and especially the GDHIF, and had assessments lined up for yet more that are in a similar situation but due to the reductions in ECO payments, can only afford to have broken, leaking and inefficient boilers replaced if they can top up with a little bit of GD Finance – now they will be living in the cold, getting ill and staying in a vicious cycle.
The CONS are muddled & not doing what they should for the electorate,hopefully they can be booted out very soon if a number of the cons die or resign!!