Industry decries lack of advertising, high interest rate, and limited incentives for government’s flagship energy scheme

Green Deal

The Green Deal has received a cool reaction from the industry on its first day in operation.

The government’s flagship energy efficiency scheme officially opened for business today, four months after the industry had been expecting it.

Deputy prime minister Nick Clegg trumpeted the scheme saying it would “help thousands stay warm for less [money].”

He said: “The UK green sector is a success story – it is the sixth largest in the world and has a crucial part to play in building a strong economy. The Green Deal will support thousands of jobs – not just over the next few years, but in the long-term.”

But sustainability expert David Strong described the launch as “more of a whimper than a bang”.

He said it was disappointing that it had been “seriously delayed” and said he was sceptical that the Energy Company Obligation, the Green Deal’s sister scheme aimed at helping poorer households and hard to treat buildings, would actually deliver the investment levels promised.

The scheme has also faced criticism for the rate of interest it will charge on loans. While the underlying interest rate on finance from the Green Deal Finance Company is 6.96%, it emerged on Friday that once costs were factored into the interest rate it be above 7.6%.

Professor Tim Dixon, chair in sustainable futures in the built environment at the University of Reading said the scheme needed a lower interest rate.“The Green Investment Bank needs a more central role to enable better overall risk management of the scheme at lower, more attractive rates of interest,” he said.

“Much more work needs to be done on the Green Deal before the scheme becomes an effective way of improving energy efficiency. We will need to retrofit one house per minute until 2050 if we are to meet our national carbon emissions targets. So scaling up retrofit with financing that provides real incentives is key.”

Alan Milstein, chair of the Residential Property Surveyors Association, said that consumers should consider funding the measures themselves, because the interest rate was not attractive enough.

He said: “With early repayment penalties and the uncertainty surrounding how having a Green Deal loan attached to your property will impact on the future saleability of the property, for many homeowners it may be advisable to look at alternative ways to fund any energy efficiency measures, which they plan to introduce.”

The Federation of Master Builders said there were still too many barriers to small and medium sized builders to get involved in the scheme despite a survey of the FMB’s members showing 27% were keen to do so.

Brian Berry, chief executive of the FMB, said: “The scheme has been designed so large numbers of small firms are excluded because of the significant costs involved in offering Green Deal finance directly to homeowners. Instead local firms will have to find a large finance provider to work with, rather than getting started on work which would boost the economy and help home-owners save money on their fuel bills.”

He added that here needed to be greater publicity about the scheme explaining it to householders.

The Electrical Contractors’ Association (ECA) also raised concerns about the marketing of the scheme. A poll conducted by YouGov for the ECA in December revealed 62% of people were unaware of the Green Deal.

Paul Reeve, head of business policy and practice at the ECA, said it had been “desperately low on marketing”. ““The potential savings and environmental benefits to homeowners, businesses and the economy could be lost until the public become not just aware of, but enthused by, the Green Deal. Right now, even awareness would be a major step forward,” he said.

Meanwhile, TrustMark, the tradesmen quality monitoring body, warned the scheme could leave people open to getting ripped-off by rogue traders offering to do additional work they are not qualified for.

Liz Male, chair of TrustMark, said: “Many homes will need essential repairs before any energy saving measures can be safely or effectively installed.  Our advice to all customers is to check the credentials of any Green Deal firm, don’t be tempted to ask an installer to do extra property repair work just because they are in your home anyway, and always insist on using a TrustMark-registered tradesman for any home repair, maintenance or improvement work.”