Industry says Labour’s proposed ‘overhaul’ of the Green Deal must be about improving existing scheme rather than starting from scratch

green deal

Labour has been warned against “ripping up” the Green Deal and starting from scratch, after the party announced that it would replace the government’s flagship retrofit scheme and its sister scheme the Energy Companies Obligation if elected to government in 2015.

In a policy document published at its party conference this week, Labour said it would “overhaul” the “woefully inadequate” Green Deal and the ECO and replace it with a new ‘Energy Save’ scheme.

A Labour source told Building that the party wanted to devise a new scheme that would “better support retrofit” with the party to launch a consultation in the coming weeks.

“The Green Deal is obviously not working so we will be consulting on what to replace it with,” the source said.

It is understood that Labour remains committed to a scheme where a loan for energy efficiency measures is attached to a property and is paid off through the householder’s energy bill, as is the case with the Green Deal, but wants to refocus the scheme on the potential energy and financial savings, rather than the ‘green’ element.

Labour also wants to find ways to reduce the interest rate, which is considered prohibitively high, as well as develop greater incentives to drive uptake for the scheme, after the latest figures showed just 12 Green Deals had been completed at the end of August.

Paul King, chief executive of the UK Green Building Council, said Labour risked creating further uncertainty. “It’s no secret that the Green Deal is off to a tough start, but talk about ‘replacing’ it risks causing further confusion and lack of confidence,” he said.

“Businesses need reassurance that this is more about improvement and continuity.”

Steven Heath, external affairs director at insulation giant Knauf, said Labour must focus on improving the current scheme rather than “ripping it up and starting again”.

“There is a good deal somewhere in the Green Deal that is fighting to get out,” he said.

“But people need to be given a reason to take it out … but they musn’t throw the baby out with the bath water. That is the real danger.”

Heath added that Labour needed to clarify is position “as soon as possible” in order avoid creating further uncertainty.

Andrew Warren, director of the Association for the Conservation of Energy, said if Labour is only proposing an “overhaul” of the scheme that was “fine”.

“Everyone agrees the Green Deal needs an overhaul. But it would be a critical mistake to tear it up and start again. The industry cannot afford for that to happen again as we’ve seen the damage that it can do,” he said.

“There’s no reason why the Green Deal cannot succeed, but it does need extra stimuli and if that is what Labour is offering then that is good news.”

In a statement in response to Labour’s announcement, the Green Deal Finance Company said: “The UK has legally binding EU obligations to reduce carbon emissions. A step change in the energy efficiency of UK housing stock is central to meeting this goal.

“The Green Deal is a sensible and cost effective way of meeting our EU obligations and protecting households against rising energy costs.

“In a period of public spending restraint it is hard to see how those targets can be met without the Green Deal, or a scheme that looks almost the same.

“We have had a constructive discussion with Labour about how our APRs and payment plans represent very good value for people.

“We are obviously keen to maintain a dialogue with Labour as their policy thinking develops.”