Shadow energy minister reveals strategy to drive take-up of beleaguered energy efficiency scheme
A Labour government would seek to underwrite loans under its revamped version of the floundering Green Deal in a bid to lower interest rates under the retrofit scheme and drive take-up of energy efficiency measures, the shadow energy minister has said.
News of Labour’s policy proposal comes as a Department of Energy and Climate Change (DECC) briefing paper, seen by Building, reveals the government is considering plans to fund energy assessments on homes to stimulate uptake of the Green Deal.
Labour announced last autumn that if elected to government next year it would scrap the government’s Green Deal, replacing it with a similar Energy Saver scheme, and overhaul the Energy Companies Obligation (ECO) scheme. But the party has provided few details on its proposals, with a policy paper expected to be published in April.
Speaking to Building this week shadow energy minister Jonathan Reynolds said current interest rates of around 8-10% under the Green Deal were too high, deterring householders from using the scheme to improve the energy efficiency of their homes. He said Labour would seek ways to bring down the interest rate, such as using the government’s balance sheet to underwrite loans made through the scheme.
Reynolds said: “I think there has to be some more levers for the government to [reduce the interest rate] such as guaranteeing the lending of the Green Deal Finance Company.”
He said any underwriting of lending would be for a fixed period and would not require “outrageous amounts of taxpayer money” as default rates are expected to be low. Reynolds also said Labour wanted local authorities to have a bigger role in delivering ECO because there were “huge benefits to doing things geographically”.
Richard Twinn, policy officer at the UK Green Building Council, said lowering the Green Deal’s interest rate “would undoubtedly be beneficial not least for increasing the number of energy saving measures that can be financed through the scheme”.
“It is by no means a silver bullet solution, and other issues - particularly the low demand for energy efficiency - must be addressed if the Green Deal is to succeed,” he added.
Meanwhile, the DECC briefing paper says the government is considering refunding the £50-£100 cost of energy performance certificates (EPC) for homebuyers who claim the government’s proposed stamp duty rebate, which is designed to boost the uptake of the Green Deal.
The stamp duty rebate scheme, due to be consulted on in February, would give people up to £4,000 of their stamp duty back if they improve the energy performance of their newly-purchased home.
However, as homes only have to have had an EPC done in the last 10 years at the time of sale, the government is concerned that homebuyers will claim the rebate using an outdated EPC. DECC therefore wants to mandate that the EPC must have been done within the last six months for homebuyers to be eligible for both rebates.
“We consider this the most appropriate approach to managing fraud balanced with an easy customer journey,” the briefing note said.