Ian Feeley, business development manager at The PK Group, refutes accusations that high interest rates are killing off demand for Green Deal finance
The Green Deal has received a lot of bad press recently; some of it deserved and some based upon misconceptions. Apart from the obvious fundamental errors (such as launching an initiative long before it was actually ready), there seem to be two main on-going criticisms levelled at the scheme, so perhaps it is worth examining them more closely.
The assumption that no-one wants it was based on the fact that thousands of Green Deal assessments had been carried out, yet only four had gone through to completion. In truth, anyone wanting a completed plan suddenly hits a brick wall as none of the Green Deal Providers (at the time of writing) have access to funding to carry out the proposed work. As a Green Deal Installer and Assessor organisation, we are currently advising the many people who are contacting us to sit tight and wait until funding becomes available before having an assessment carried out.
The second assumption is that the interest rate is too high. I suppose if it was clear what the interest rate will be in reality, then it would be easier to evaluate. With only four Green Deal plans completed, this is not so easy to do. The best rate I have heard is 6.96 per cent with the worst being 8 per cent. And yes in today’s climate of low interest rates this may seem a bit high, however, the rate is fixed and for 25 years. Will the bank base rate be 0.5 per cent in 5 years, never mind 25? Add to that the fact that if you chose a personal loan, as opposed to one on the energy meter, many would struggle to get it anyway. Has anyone applied for a loan recently? We also shouldn’t forget that, if you subsequently decide to move during the course of a bank loan, then you either have to pay it up, or continue repaying the loan whilst the new homeowners benefit.
So, is the Green Deal a complete flop, or just a great scheme dogged by the usual teething problems and bureaucracy? To me it looks like the latter, a scheme set up with the best of intentions and one that will eventually be very good for millions of people and the country’s carbon emission reduction targets. Will it single-handedly save the planet? Unlikely, but it’s a start. Will it help millions reduce their ever increasing energy bills? Most definitely, so it gets my vote.