Labour’s pledge to replace the Green Deal with a new Energy Save scheme has caused major ripples - but what might Labour’s scheme look like?

John Alker

It’s been a manic couple of days for those with an interest in politics, energy and housing. While Ed Miliband’s energy price freeze and housebuilding commitments have grabbed the headlines, another announcement was slipped out fairly discretely, but is causing ripples in the construction sector.

Labour published its ‘One Nation Economy’ document this week, which included plans to “overhaul the Green Deal and replace it with a new Energy Save scheme”.

It’s hardly surprising that a Labour government would want to take a long hard look at the Green Deal and take steps to improve it (we’ve been urging the current government to do the same), but when this translated into headlines about ‘scrapping’ the Green Deal and ECO, alarm bells started to ring.

I’ve had a constant stream of serious industry players get in touch over the last 24 hours asking what on earth is going on. It’s not that they don’t think the Green Deal and ECO can be improved going forwards, but they’ve spent the last three years building a business model for delivery, and any confusion about major shifts in policy – even from an opposition party – can cause confusion, lack of confidence and inertia.

So, in an effort to help get some clarity out there, here’s what I know:

1. Labour want to lose the Green Deal brand. Or, as Dave Powell from Friends of the Earth puts it, they’re going to take the Green Deal, “put a frock on it and call it Susan”. I think I know what he means. They want to focus on the energy savings, not the green-ness, and for political reasons would want it to look like a fresh approach.

2. However – crucial point – Green Deal finance, i.e. a loan attached to the property is still going to be a central part of the policy. Given it was Ed Miliband who kicked of Pay As You Save pilots in DECC, and shadow energy minister Luciana Berger has always said they support Green Deal in principle, this shouldn’t be surprising. If you want to reduce the upfront cost to zero, it’s the only way of doing it (unless you use massive subsidies).

3. They are up for looking at how to reduce the interest rate, including the possibility of using government guarantees/Green Investment Bank. This is perfectly sensible, and in fact UK-GBC is running a Task Group doing exactly that. However, how much you can shave off the interest rate is a big question.

4. They would like to be able to have a more diverse range of financial offerings for people – low cost loans, mortgage extensions. Great, so would we. It’s not clear exactly how much power government will have to do that – but if combined with greater intervention to reduce the interest rate, that would be interesting. It could be a significant political difference with the current government – more appetite for direct state intervention. KfW is often held up as a model, but that is taxpayer subsidised.

5. They know that Minimum Energy Performance Standards have an important role to play. I see no way that they would consider expanding them to owner-occupiers, but I think we could expect robust implementation, and a trajectory going beyond 2018. I would imagine Consequential Improvements are a distinct possibility. I haven’t heard anything about additional incentives – the game changer would be differentiated Stamp Duty in my view.

6. They want ECO to be directed more towards the fuel poor, and (related, I think) they want to really boost street-by-street, community approaches. As Nigel Banks of Keepmoat has tweeted, that may look like a Local Authority Fuel Poverty reduction target. Presumably the main source of finance remains a smeared ECO-style subsidy, but let’s see. Given ECO is the main priority for so many delivering energy efficiency right now, the importance of clarity on this can’t be underestimated.

7. Luciana Berger has said in the Guardian that “Ensuring a smooth transition [to Energy Save] will be our number-one priority.” This is very important, and she needs to continue to make that point loud and clear. Read the full article here.

8. Labour will consult with industry and other stakeholders – I believe in the form of some type of green paper, with roundtables etc – in the next few weeks. I don’t know whether this means something is imminent, or whether we’re talking about between now and Christmas or beyond.

That’s as much as I know – I’m very interested to hear people’s views. I really hope we’ll get a bit more information directly from shadow ministers about their thinking, and the timeline for consultation etc ASAP.

John Alker is director of policy at the UK Green Building Council