It is something of an understatement to say that the Green Deal (GD) has had a ‘sluggish’ start. The early figures make brutal reading for Greg Barker and his staff at the Department for Energy and Climate Change (DECC).
We did expect a slow start, but possibly not quite as slow as this; particularly as the government sought to make a lot of political capital out of the initiative. The problem is that they have saddled the scheme with too many costs for the end user.
The assessment costs up to £150 and is not refundable. The finance packages come with a 6.9 per cent interest rate over 25 years – which is huge in an era of low interest rates.
We advised DECC against this level of charging, but it clearly felt it needed to make the scheme attractive to potential finance providers. The trouble is that this has made it less attractive to potential users. Also, the Golden Rule is absolutely not a guarantee. Consumers feel they are being asked to take a bit of a financial risk.
This has been exacerbated by software problems with the SAP model used to predict savings. In some cases, potential energy bill reductions were over-estimated by up to 77 per cent.
However, the principle of the scheme is sound. In theory, householders would find the prospect of lower energy bills at no upfront cost attractive, but what is happening in practice is rather different.
Loft and cavity wall insulation was being offered for free by local authorities and energy suppliers before the GD – now it is still free, but only in theory and if the improvements do deliver the savings promised. Householders think they are taking a chance – and that brings us to the question of trust.
The heating and plumbing sector has a chequered history when it comes to rogue trading – many people are naturally suspicious. Sadly they don’t particularly trust politicians either at the moment. It’s an unfortunate combination for a UK public that already has a healthy scepticism about anything that sounds too good to be true.
The government’s intentions are good, but this betrays its lack of understanding about how the industry works.
However, all is very far from lost. The government will surely look again at the finance – the costs to consumers are clearly proving to be a major turn off – and they are already trying to address the software glitches. The slant of the publicity for the scheme could be different – there is too much emphasis placed on the financial payback when in fact the improvements would pay back with or without a GD finance package.
The ‘cash back’ incentive scheme has also proved problematic because it is only available via Green Deal providers. If it was made available to small, properly accredited installers projects would pick up. Many good, independent installers with a reputation for reliability among their local community are simply ignoring the opportunity because they don’t want to pass business onto GD providers. Why should they? So let’s make it easier for them by giving their customers access to the cash back offer.
So, it is a deeply flawed scheme, but one that can be saved with some careful tinkering. However, improvements need to be made quickly before the scheme drowns under the deluge of bad press and industry scepticism.