Writing exclusively for ClickGreen, Shadow Climate Change Minister Luciana Berger has urged Energy Ministers to make significant improvements to stop the Green Deal being a green flop.
And the Labour MP has called on the Government to “take its head out of the sand” as she delivers a four-point plan that could help the scheme launch successfully.
Here the shadow frontbencher explains her thoughts: "Over the past few weeks the Green Deal has lurched from one setback to the next. Beset by rumours of energy companies not being ready to deliver the scheme, legislative gridlock, a delayed launch and estimates of job losses in the insulation industry resulting from its introduction.
Labour wants the Green Deal to succeed. We’ve said from the very beginning that we strongly support the idea in principle. In fact it was the last Labour government who initiated pilot programmes to test the theory.
The reality is if done properly, a pay as you save energy efficiency scheme could deliver thousands of jobs, lower bills, and reduce our national carbon emissions. If it isn’t, it won’t and unfortunately, right now it looks like the Green Deal won’t deliver.
Since 2010 when the Energy Bill was first published I’ve had dozens of meetings about the Green Deal. I’ve spoken to consumer watchdogs, energy companies, energy efficiency and home improvement companies, big retailers, community groups, co-operatives and social enterprises. Yet no matter who I’m talking the conversation always starts the same: ‘the Green Deal, it’s a great idea but...’ followed by a lengthy list of concerns about the current proposals.
In recent months the CBI, Which?, the Federation of Masters Builders, the Construction Products Association, Green Alliance and even the Government’s own advisors, the Committee on Climate Change, have warned the Green Deal will fail without significant improvements. Unfortunately, right now it seems that the Government isn’t in the mood to listen.
Climate Change Minister Greg Barker dismisses anyone who raises concerns as scaremongers. But the reality is that however good the Green Deal looks on paper, the current proposals aren’t up to delivering in practice. Changes need to be made. The government should take its head out of the sand, listen to these voices and work with all of us to ensure the scheme delivers the positive outcome that we want to see.
First, affordable Interest rates are absolutely crucial in determining the success of the Green Deal.
Polling conducted by the Great British Refurb Campaign found that only 7% of homeowners would be interested in taking up the Green Deal if the interest rate is 6% or above.
A report by environmental think tank E3G says that relying on commercial loans could mean interest rates are as high as 8%, while modelling by London-based home improvement firm, Crystal shows that even with a 5% interest rate, measures taken out under the Green Deal would cost twice as much as paying for them upfront. Finance at these kinds of rates is not attractive to the vast majority of bill payers, demand will be limited and the Green Deal will struggle to get off the ground.
One solution is the Green Investment Bank. The Government announced last year that one of the priorities for the Bank will be to provide support for the Green Deal, but did not specify how this would be done. It is vital that any support available is used to secure affordable, attractive interest rates for consumers and lower the cost of Green Deal packages.
Secondly, support small businesses by opening up the Energy Company Obligation to every Green Deal provider.
Labour's vision for the Green Deal is one where small businesses, co-operatives, local authorities, charities and social enterprises are able to compete alongside the big six and other large companies that want to take part in the scheme.
The proposals in the Government consultation currently full ECO access to the Big Six energy companies. They force smaller providers to bid for just 50% of the work available under the carbon reduction element and exclude them from the Affordable Warmth element altogether. Also there is no certainty that they will be successful in winning contracts in through the brokerage system.
Not only do these proposals limit smaller providers from competing on a level playing field across the whole Green Deal market, they also further entrench the dominance of the big six in our energy market. Labour wants to see the Green Deal open to all types and sizes of providers by allowing equal access to the ECO.
Third, make hard to treat cavity and loft insulation eligible for funding through the ECO.
DECC’s own estimate in their most recent impact assessment show that when the Green Deal and ECO are introduced, loft installations will fall by 90% and cavity wall insulations will fall by 70%. This will be a disaster for our insulation industry and would surely make meeting our emission reduction targets impossible.
It is not as simple as saying that the increase in solid wall insulations (SWI) will provide work for insulation firms - like the Government claim - as significant additional training is needed to install SWI. The reality is that a period of transition from existing schemes to the ECO is needed. Without this firms will go out of businesses and a Europe Economics report estimates that as many as 3,000 jobs will be lost.
Labour is proposing that the four million harder to treat cavity wall installations also be made eligible for support through the ECO in order to continue supporting the insulation industry and to safeguard these jobs.
Fourthly, more help for the fuel poor.
Between 1996 and 2009 the number of houses in fuel poverty fell by one million. But with soaring energy bills, more people will be at risk of fuel poverty if the Government go ahead with their plans to offer three times as much support to households who can already afford to improve their properties, rather than helping families who can’t even afford to heat theirs.
The funding from the Energy Company Obligation should be split equally between affordable warmth and the carbon saving targets, and the priority should go to low income hard to treat homes, over able to pay homes. This would drive carbon reduction while ensuring that we put those who need help most, first.
When it responds to the Green Deal consultation the Government needs to end the uncertainty about its proposals and set out a credible way in which the Green Deal will deliver the green jobs and lower energy bills we all want to see.
With the clock ticking until the proposed launch if these issues aren’t addressed urgently the success of the Green Deal will continue to be in doubt."