The Green Deal Scheme
In January 2013, the Government launched the Green Deal to overhaul the UK’s inefficient housing stock whilst reducing energy bills. It is designed to allow households and businesses to make energy efficient improvements such as double glazing at no upfront cost. Instead, repayments are made over time through electricity bills. All households are eligible to apply.
The Green Deal is a new kind of unsecured loan with an interest rate of around 7%. Occupiers are only liable to make the repayments whilst they are the bill payer. The repayment terms vary between 10 years and 25 years, with the term depending on the type of improvements made. Essentially, the scheme is based around a ‘pay-as-you-save’ principle, that is, the expected financial savings must be equal to or greater than the costs attached to the energy bill. This is the key consumer protection, known as the ‘Golden Rule’.
Further key consumer protections include:-
- The measures must be approved and the claimed bill savings must be those accredited through this process.
- The installations must have been recommended by an accredited advisor who has carried out an assessment.
- The measures must be installed by an accredited installer who displays the Green Deal Code of Practice quality mark.
- The Green Deal provider must advise within the terms of the Credit Consumer Act, taking account of each applicant’s individual circumstances.
- The Green Deal provider must have the express consent of the current bill payer.
- A Green Deal must be disclosed to subsequent bill payers.
- Energy suppliers must collect the Green Deal charge and pass it on within the existing regulatory safeguards for collecting energy bill payments.
So, how does it work? There are four stages required to implement a Green Deal plan. Firstly a Green Deal Assessor will assess your property and produce a report setting out the energy efficient improvements which could be made. Secondly, you will contact a Green Deal provider to discuss your proposed plan and the funding required. There is no cap on the level of funding but it is limited to the “Golden Rule”. Thirdly, installation by a Green Deal installer who shows the quality mark and fourthly, repaying your plan through your energy bills.
Edward Davey, the Energy and Climate Change Secretary, has said that the Green Deal has got off to an “excellent start” following the release of the first official statistics by the Department for Energy and Climate Change. Arguably this celebration appears premature, given that only 1,803 assessments were made between December 2012 and February 2013. Take up in December 2012 and January 2013 was not as “excellent” with only 74 assessments taken out. Notably, these figures relate to assessments and not to installations.
Ultimately the Green Deal has been developed in an attempt to lower the UK’s carbon emissions by cutting energy bills and improving insulation. It is believed that 38% of the UK’s emissions are due to poorly insulated homes. However, until further statistics are revealed, it is difficult to be certain of the impact of the Green Deal. If in practice it lives up to the expected results, it should help improve much of the UK’s housing stock.