Properly executed, the Government’s new Green Deal energy saving loan scheme has the potential to transform energy saving in Britain’s homes, bringing in big gains to the economy, household budgets and the environment at the same time.
But it has got off to a disappointingly slow start and seems on course to deliver a few tens of thousands of home retrofits a year, at most. Given all of the time and effort that has gone into creating the scheme from government and the private sector and the scale of the original ambition behind it, this is a tiny sum.
The Green Deal ought to be delivering several 100,000 retrofits a year. A goal of more than one million homes per annum would be reasonable given the size of the task of improving the UK’s still highly energy-inefficient housing stock.
The benefits in carbon savings, energy bill reductions, maintaining and creating jobs and enhancing welfare and health from this level of retrofits would be enormous.
The most important problem with the Green Deal, as it now stands, concerns a funding gap caused by its so-called ‘golden rule’ which places limits on how much a household can borrow under the Green Deal. Most households which might be interested in taking out a Green Deal would find themselves having to pay at least £1,000 upfront.
Green Deal assessments, the starting point for the scheme, need improving and the bulk of them need to be provided free of charge.
In this report we make several recommendations which, taken together, represent a retrofit for the Green Deal – one which would enable it to fulfil its great potential.
The Green Deal interest rate needs to be lowered; we suggest how it could be. We also argue for a government-backed incentive scheme for Green Deal retrofits. This would help to close the Green Deal funding gap, but it would also encourage many households to use the Green Deal as an assurance scheme without having to use Green Deal finance.
We make recommendations for improving the assessment process, for encouraging more small businesses and traders to be engaged in the scheme, and for the Green Deal to have a stronger impact in streets and local communities.