'Green deal' is ''too expensive'' for UK homeowners

By Laura Brown - 25 May 2011 12:26:0 GMT
'Green deal' is ''too expensive'' for UK homeowners

The 'green deal' is the flagship project at the centre of the UK government's environmental commitment and strategy.

Energy secretary Chris Huhne stood in the Commons this month to explain how loans of £10,000 would help plug the gap of up to three billion pounds worth of wasted energy each year by installing new insulation, boilers and double glazing in houses across the country. Poorly insulated and inefficiently run homes would be a thing of the past, and homeowners could expect to save up to £400 on the fuel bills each year.

Yet the proposal has been criticised by campaigners, green ministers and builders arguing the cost for homeowners will be too great to inspire real take-up.

From next year, firms and retailers like Tesco and Marks and Spencer along with utility companies will offer green refurbishment work designed to reduce heating bills and carbon footprints. Over a quarter of the UK's carbon emissions come from its housing stock. Homeowners will not be expected to pay anything upfront instead the cost of the installations and equipment will be added to their energy bills and paid off.

Yet Thinktank E3G argues there is not enough incentive to attract homeowners. Repayments will see interest charged at market rates. They claim this risks breaking the government's 'golden rule' which states that savings on energy bills must exceed the cost of the loan over its term.

Transform UK, who have campaigned for the establishment of a Green Investment Bank, says the government is heading for a ''car crash''. They believe the 'green deal' will only work for consumers if they are offered low cost loans the bank can provide. The programme, they argue, would then be cheaper and would be taken up by more people. 'The green investment bank' says Ed Mathew, director of Transform UK, ''is the glue that will hold the green deal together.''

Even builders across the UK, who might be expected to be in favour of the scheme thanks to the work potential for their industry claim it may not offer the ''green revolution'' the government is expected.

The Federation of Master Builders (FMB), who also back the Green Investment Bank, surveyed its members. 44% thought homeowners were unlikely to take advantage of the scheme.

Brian Berry from FMB says, ''If the Government wants the Green Deal to be a success it should start by offering additional incentives. 70% of respondents to our survey believe that cutting VAT to 5% on all energy efficient materials and work would increase homeowner interest. More than a quarter also believe that council tax reductions would be the biggest incentive for homeowners''.

Builders, Berry added, are also concerned they will be ''squeezed out'' of the process. ''Small, local building companies should be the natural choice for homeowners wanting to retrofit their property or make it more energy efficient. However, nearly half of FMB members are worried that they will be squeezed out of the Green Deal market by the major energy companies and retailers and 58% felt that it was either very unlikely or unlikely that small and medium sized building companies would see their workloads increase as a result of the Green Deal''.

''The FMB is therefore calling on the  Government to  help small building companies have equal access to the energy efficiency market by allowing an independent third party financial provider to handle Green Deal finance packages. This would help ensure that small building companies can compete fairly with the larger companies who will be offering 'one–stop-shops' to consumers''.