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'Deal or no Deal’- why the Green Deal programme fell short

Updated: Jul 26, 2018

Green Deal Programme

It has now been over four years since the government announced the closure of its flagship Green Deal programme and despite the government publishing its Clean Growth Strategy in 2017, very little progress to date has been made in the vital “able to pay” market to encourage the mass middle class to invest in their homes.

Britain has some of the least efficient housing stocks in the EU and it has long been seen as a key policy objective to deliver high quality retrofits to help consumers reduce their energy use and costs and improve the comfort of their homes. This is also central to the UK in achieving its mandatory 2050 carbon reduction targets.

Despite reservations, particularly on quality assurance of workmanship, the objectives of the scheme were sound based on the successful pilot activity of the earlier “Pay as You Save” pilots run by the Energy Saving Trust under the Labour Government in 2007.

However, the Green Deal morphed from a relatively simple PAYS scheme with upfront costs paid through a loan mechanism paid from the savings on your energy bill to a much more complicated scheme. Funding sources like the ECO & RHI and the need for all deals to meet some new somewhat abstract criteria “golden rule” –i.e. the payback needed to be short and interest was high at over 8% meant that uptake was much lower than government had expected.

When the project was eventually pulled, the National Audit office estimated that the cost of the whole project was over £17,000 per property. At that level, very deep retrofits could have been fully grant funded.

Since then, and despite the UK signing up to the Paris Accord and the publication of its Clean Growth Strategy in 2017, the domestic energy efficiency market has stalled. This was not helped by the re-calibration of the only energy efficiency scheme left ECO2/3 to focus on fuel-poor homes, which also faces challenges given that most energy suppliers have met their initial targets.

There needs to be a much higher ambition and as The Committee on Climate Change’s stated a more “robust policy framework will be needed in the able-to pay owner occupier segment of the housing stock” to have any chance to meet the 2050 carbon targets.

The time for action is now, particularly given the rising energy costs and lack of affordable finance. We need to learn the lessons from the Green Deal and unlock the huge untapped commercial opportunities for high quality retrofits with incentives like stamp duty rebates, council tax re-balancing, green mortgages and innovative soft loans.


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