The Green Deal needs more incentives to work

The likely success of the government’s flagship Green Deal energy saving policy is currently being debated by MPs.

The government has made some recent changes to the Energy Bill, which introduces the Green Deal. These changes try to answer calls from a very broad church of organisations including FTSE100 businesses, major trade associations, international NGOs, small companies, and local community groups.

There are many potential benefits to the Green Deal including a significant reduction in carbon emissions, more help for people living in fuel poverty and thousands of new jobs, and the government has not hesitated to extol these benefits.

However, all of the 70-plus organisations united behind the Demand a Better Bill campaign, including the Federation of Master Builders, think the chances of Green Deal success are not good unless more improvements are made to the Energy Bill.

The Warm Homes Amendment is now up for debate by MPs. The amendment would introduce three new clauses into the Bill. The first clause links the government’s energy saving programme to the UK’s legally binding target of an 80% cut in emissions by 2050 and to the required cuts that must be achieved in each carbon budget. It would also link the programme to important fuel poverty targets. The second clause, would place a duty on the Secretary of State to produce a delivery plan for the energy saving programme, and the third clause of the amendment would ensure the government provides an annual progress report on the carbon saved by the Green Deal.

Without an energy saving plan that is clearly linked to the UK’s carbon budgets, the Green Deal lacks certainty and will fail to attract sufficient investment from the businesses needed to deliver the package to homeowners, which is why the government should introduce the Warm Homes Amendment. This is the view from small contractors who are, after all, experts in the field of home improvement.

In addition, the Federation of Master Builders is challenging the government to urgently address a further issue in order to prove it is serious about delivering, in the words of the Energy Secretary, “a once-and-for-all refit that will make every home in Britain ready for a low-carbon future”.

Consumers need convincing as much as businesses that the Green Deal is a good deal. There is, after all, no market place to enter without customers. Unfortunately, a recent survey of our members, small building firms that are in contact with homeowners on a daily basis, found that 44% think homeowners are unlikely to take advantage of the Green Deal when it launches in autumn 2012.

Therefore, we want to see the government offer additional incentives to homeowners and landlords to persuade them to make their properties more energy efficient. Everyone who gets involved in the Green Deal will save money on their fuel bill, but most of this saving will be used to pay back the Green Deal finance. There are a number other incentives the Government could consider in order to make the Green Deal more appealing. 70% of respondents to our survey believe that cutting VAT to 5% on the installation of all energy saving materials would increase interest. More than a quarter also believe that council tax reductions would be the biggest incentive for homeowners.

Ministers at the Department of Energy and Climate Change must start to bend the ear of the Treasury and make sure there are incentives of this kind introduced in the Spring 2012 Budget, ready for the launch of the Green Deal in October 2012.

In short, we need a more ambitious Energy Bill that will set out a clearer plan for bringing the UK’s homes up to required standard. Only then will the Green Deal have the potential to become a great deal!

Brian Berry is director of external affairs at the Federation of Master Builders