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Green Deal has been a 'failure' but it can be reformed, say MPs

The Green Deal has been branded a “failure” that has caused “frustration and confusion for both consumers and the supply chain” by a committee of MPs.

The Energy and Climate Change Committee’s report, The Green Deal: watching brief (part 2), said the first 18 months of the scheme “have been largely wasted”.

It said the programme had been dogged by inefficient funding, bad communication and poor implementation.

The report found the current Green Deal finance package was “burdensome and limiting” and its expensive interest rates made it unattractive to consumers who could find cheaper funding elsewhere.

The committee recognised that the Department for Energy and Climate Change might be unwilling to subsidise the loans in order to lower their interest rates, and recommended that other incentives such as stamp duty and council tax discounts on energy-efficient properties should be considered.

It also said the DECC should look at whether it was “too cautious” in the way energy savings were calculated under the scheme’s golden rule, whereby the cost of the measures installed must be covered by the reduction in fuel bills they create.

The report said publication of “misleading” information by the DECC and the Green Deal Finance Company, which were criticised by the Advertising Standards Authority, also “further undermines a programme that already suffers from poor public understanding and interest”.

Following the ASA adjudication, the Green Deal Finance Company said it was clarifying its description of the golden rule in its brochure following the ASA’s adjudication.

However, it pointed out that it did not sell Green Deal plans directly to consumers – it is a business-to-business organisation – and the ASA had agreed that GDFC had not said the golden rule was a guarantee.

The DECC should be clearer about its ambitions for the number of plans sold and reductions in carbon emissions, the committee found.

It said the government had failed to communicate the wider benefits of energy efficiency because it had relied on providers to market the Green Deal.  

The committee recommended the government undertake a national communications campaign and that there should be additional promotion by trusted local bodies such as local authorities.

Its report said the Green Deal had the potential to help reduce carbon emissions but that the barriers facing it had to be addressed.

Energy and climate change select committee chair Tim Yeo said: “Stamp duty discounts and variable council tax rates could be used to broaden the appeal of energy efficiency improvements and make them even more of a money saver for households.

“Extra incentives certainly need to be considered, as the government’s flagship pay-as-you-save finance scheme, the Green Deal, has only delivered a fraction of the expected benefits so far.”

The UK Green Building Council said the government should provide greater incentives for householders to improve the energy efficiency of their homes such as stamp duty and council tax discounts.

UK-GBC director of policy and communications John Alker said: “Energy efficiency is too great an untapped opportunity for this message to fall on deaf ears once again.

“The government needs to treat energy efficiency as a national infrastructure priority, which means a long-term programme of incentives and support, enabling the private sector to get on and deliver lower bills for householders.”

A spokesman for the Green Deal Finance Company said there had been a “step change” in Green Deal activity since it appeared before the committee in February with the number of providers of Green Deal finance rising from 44 to 61 and 17 more going through its processes.

It said it had seen a 70 per cent rise in ongoing applications since June and was “really pleased the committee finds that the interest rates offered by GDFC are competitive for the type of loan proposed”, adding that the committee acknowledged the deals had a lower credit threshold than many standard loans.

Energy and Climate Change secretary Ed Davey said: “We share the committee’s ambition to drive a step-change in home energy efficiency – helping to cut carbon emissions and control energy bills. Our target is to improve the energy efficiency of 1 million homes by March 2015 – and we’re on track. £540 million has been committed and as of June we have improved over 750, 000 homes.”

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