The Green Deal

The Green Deal

The Green Deal


BB&D asks what this new initiative means for the building and construction industry?


In January 2013, the government launched the Green Deal initiative, which aims to create more energy efficient home across the UK.
Under the Green Deal, bill payers would be able to improve their home with new energy-efficient technology without putting the cash up front. Instead, businesses would front the capital and cliam money back via the energy bill. In theory, it would mean that the savings will equal or exceed any costs incurred getting work done.

The government claim that the framework is flexible, giving both consumers and businesses the opportunity to make the energy efficiency improvements that best suit their situation. According to the proposal, millions of homes and businesses could benefit from improvements under the Green Deal. But how effective is this scheme really going to be? Who will benefit and who will suffer under these new government objectives?

Brian Berry, Chief Executive of the Federation of Master Builders says “The Green Deal has launched, and on paper its benefits are manifold – the energy-efficiency retrofit market is worth an estimated £3.5billion a year to Britain’s beleaguered building firms – and its aims laudable: saving the planet while arresting rocketing energy bills.

“So why hasn’t it taken off? Interest from the public has been lukewarm at best, while critics have pointed out that interest on the up-front loans is a less-than-competitive 7 per cent. Add to this the fact that the policy is over-engineered and complicated and you begin to understand why the Green Deal is such a hard-sell.

“From many smaller, trusted local builders, accessing the necessary training and finance has been problematic – in a tough commercial environment, employers are having to swallow rising overheads to operate without laying off staff or raising prices, so devoting precious resources to train workers to deliver the Green Deal has understandably not been a top priority for most.

“Does this mean the scheme is doomed? Maybe not, but ministers must act to stop it being a damp squib. The guidelines must be simplified, and backed by a coherent government marketing strategy. The interest rate on the loans needs to be more attractive, and how about a “builders’ cooperative” to allow smaller firms to provide the necessary finance mechanisms for their customers?

“We need keener incentives. A cut in the rate of VAT on energy-efficiency improvements would be a much more elegant and effective way to encourage homeowners to future-proof their fuel bills and help the Government meet its green targets. Is it too much to hope we see this in the forthcoming Budget?

Kim Vernau, CEO of BLP Insurance, is also concerned about the implementaion of the sceme. She comments, “The ultimate objective of the Green Deal, to help transform the energy efficiency of Britain’s ageing housing stock by helping to finance otherwise unaffordable home improvements, is certainly laudable. A number of good incentive schemes to encourage early take-up also look promising, including the initiative to replace old boilers for the cost of £2,000 – £3,000, with no upfront costs for the property owner. The government has also set aside £125 million for a “cashback” scheme, rewarding homeowners £650 for fitting solid wall insulation and £220 for loft insulation, on a first-come-first-served basis.

“There is however a great deal of confusion surrounding the policy, which originally promised so much. Following their initial estimations that the Green Deal would help 14 million households by 2020, the government has omitted to make any further predictions, including no indication of how much carbon is likely to be saved. Further doubt stems from Eric Pickles deviation from the original proposal which sought to compel homeowners building extensions or conversions to improve the efficiency of the original building.

“The Green Deal is already facing strong criticism and predictions of failure, further beset by a number of implementation difficulties. Whilst the success of the scheme ultimately rests with the enthusiasm of the British public to implement it, the fact is that it is too early to tell whether it will overcome the current criticism.”

So, whilst the potential for success is clear, the implementation and finer details of the scheme are obviously crucial to get right. As the initiative gets rolled out across the UK, people are keen to see how things take off; whether consumers buy into the ideals, businesses invest in the development, and the government live up to their promises.

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Ben Crowther
Ben Crowther