This week sees the launch of the long-awaited Green Deal, the government’s flagship initiative to whip Britain’s leaky homes into 21st century shape. It’s a simple idea at heart, rather complicated in the execution, which presumably explains the delays.
Britain’s housing stock is an enduring national problem when it comes to energy efficiency. Many people still don’t have basic efficiency measures like loft or cavity wall insulation. Building regulations are loose and the construction industry is years behind other European countries. The result is houses that lose heat out the walls and windows, with British Gas estimating and 1 in 4 pounds spent on heating in Britain is wasted. Mortality rises by 18% in Britain, and only by 10% in Norway, which is much colder. In short, anything that gets to grips with household energy is welcome news.
There are several obstacles that stop people from getting on with improving their homes. Too much stuff in the loft is one, and the government can’t help you there. The upfront cost of efficiency measures in another, and the Green Deal targets this particular obstacle. We all know that we’d save money in the long run if we replaced the boiler or put in triple glazing, but it’s the cost today that puts us off. Under the Green Deal, the government will pay the cost of the efficiency upgrade, and householders will pay them back through the savings on their energy bills.
In theory, the repayments will usually be smaller than savings, meaning the household comes out better off every year. A smart idea, I’m sure you’ll agree, and it’s all carried out through energy suppliers and contractors rather than loading it onto the government. We save money, enjoy warmer homes, and lower our carbon emissions in what could be a rare win-win policy.
That’s the idea. Whether we pull it off or not is another question, and there are some concerns. Perhaps the biggest is that interest is payable on the loan and the rate of 7-8% doesn’t look particularly competitive. There are also a variety of smaller charges and set-up fees, depending on which company you go with. You don’t want to sign anything without reading the small print. And it will might make buying houses a little more complicated, since Green Deal loans will stay with the house and transfer with ownership.
The Green Deal might not reach the people who need it most either. Tackling Britain’s energy poverty problem would need an extra intervention. Many low income families live in rented accommodation, and since the landlords don’t pay the bills, there is no incentive for them to improve energy efficiency. The government could take the Green Deal one step further and introduce minimum efficiency standards for rented accommodation. Landlords would be able to use the Green Deal financing arrangements, paid back through their tenants energy bills.
So, a good idea. It’s too early to tell how well it will work, but I hope that tweaks will be made where necessary. I also hope this is the beginning of the government’s engagement with our energy profligate culture and not the end of it.