Is there a future for the Green Deal?

It wasn’t so long ago that the government was describing the Green Deal as ‘transformational’ and a key plank of its commitment to being the ‘greenest government ever’.

Indeed as recently as February this year the prime minister pledged that the government would help make Britain ‘the most energy efficient country in Europe’.

How times change because now even the government’s most ardent supporter would be hard pressed to say the Green Deal is making a difference.

To date just 219 Green Deals having been completed - where the householder is paying of the cost of the installed measures through their energy bill - against a target to upgrade 10,000 homes by next year and 14 million by 2020.

So, it’s hardly surprising that the dismal take up of the Green Deal is starting to attract criticism and not just from the industry.

A Cross-Party Government Commission has voiced its concerns stating: “Financially, the Green Deal is unattractive and uncompetitive, it is overly complicated and it doesn’t work for social housing organisations”.

And that’s the point because financially the Green Deal just doesn’t stack up for householders wanting to retrofit their homes, which means of course that there isn’t the demand in the market for builders to invest in becoming Green Deal installers.

Green Deal interest rates in excess of 7% mean that most householders would be better placed to secure a loan with their bank or building society. The cash back offer offering householders a maximum of 50% of their contribution is helpful but this is limited to early adopters only.

And then there is the added complexity of the scheme itself which is proving to be challenging even for the most dedicated enthusiast.

What is clear is that if the Green Deal is to have a future the government needs to be underpinning it with some fresh incentives and removing some of the complexities.

Getting the initial assessment seems to be working fairly well but for anyone wanting to part fund their Green Deal package using Energy Company Obligation (ECO) funding the challenge is to find a Green Deal Provider and an installer who understand the financing.

Small builders who might have been expected to tap into the Green Deal have been put off by the complexity of becoming Green Deal installers.

So, it’s not surprising that the Labour Party has sought to make political capital. The former shadow energy minister Luciana Berger has pledged a smooth transition to a new Energy Save scheme.

What this might look like is still unknown but Berger has said that it would address some of the key failings of the Green Deal including the interest rates and a greater role for local authorities.

Clearly if the Green Deal is to have wide spread take up the Government needs to be looking at a range of incentives that are available to all over a long period.

Cutting the rate of VAT for Green Deal related measures is an obvious incentive but one not likely to carry much favour with the current government but there are others such as council tax breaks, reduced rates of stamp duty or subsidised interest rates for Green Deal work.

What is clear is that if the Green Deal is to have a future the government needs to be underpinning it with some fresh incentives and removing some of the complexities.

To do nothing is no longer a viable option if the government wants to save its flagship green policy.

Brian Berry is the chief executive of the Federation of Master Builders