The Green Deal aims to transform the energy efficiency of 14m draughty homes, cutting carbon and bills. But the cold wind of doubt remains strong.
Last month, the launch of the government’s Green Deal was described as the biggest national improvement programme since the Second World War. The Department of Energy and Climate Changes says the scheme will cost around £17.3bn over ten years and bring £25.6bn of benefits. The ECO (mandatory fuel poverty action) alone is expected to prevent the emission of 27.8 mega tonnes of carbon dioxide over two years.
With such ambitious figures, there will undoubtedly be a huge amount of pressure on the Green Deal to get this right. Here, representatives from the worlds of construction and real estate give their views on how the Green Deal launch will impact on their sectors.
Construction
Government originally pledged that work under its flagship Green Deal programme would start on October 1 2012 but ministers have now confirmed this will not be happening until February 2013 when the repayment mechanism is in place. However, under what is now euphemistically described as a ‘soft launch’ households are able to get their homes assessed from October onwards and companies that want to become certified Green Deal Installers can apply for certification.
Federation of Master Builders (FMB) Chief Executive Brian Berry:
“The FMB has long argued that for the Green Deal to succeed, government must generate business confidence in the scheme by sending clear policy signals. When agreed time frames are not adhered to, businesses lose faith in what the government is saying. This could mean that the next time such a scheme is announced, these businesses will be reluctant to invest in the areas of their business that are essential to the government delivering their policy objectives.
“The government predicts that the Green Deal programme could kick start £14bn of investment over the next decade and support at least 65,000 new insulation and construction jobs by 2015. However, with the construction industry continuing to falter, we need this stimulus right away, which is why it is so disappointing that there will be a three-month delay to actual work commencing under the Green Deal.
“It is now more important than ever that government ensures the Green Deal is a success once it does eventually get going. As part of this, government must support the efforts of SMEs to forge a mutually beneficial relationship with one or more Green Deal provides. Without certainty that small firms will have access to the Green Deal market, it will be much harder to drive the development of new skills needed to support the effective transition to a low-carbon built environment.”
Real Estate
Since 2009, households in fuel poverty have risen to 5,314,655, a staggering 24.7% of England’s total households. In real terms, this means at least 10% of their household income is spent on fuel just to keep their home in a ‘satisfactory’ condition. As winter draws in and bills are on the rise, many are now turning to eco efficient renovations. Attractive figures are adding to the allure, where in three years it is predicted that an eco-friendly house may be worth 6% more than a standard property.
Matthew Pryke, CEO of Fine & Country International Estate Agency:
“Upfront costs are an obvious point of hesitation for the home owner, where 20 year loans at a potential 7.5% interest rate to install new boilers and other energy efficient products will affect the value and saleability of their home as the loan is tied against the property, rather than the individual. By putting this energy debt on the house, whereby energy-efficiency firms would borrow from a central fund that the householder gradually pays off via the savings creating lower gas and electricity bills, means that many sellers will perceive the scheme as a disadvantage.”
How much you can ‘borrow’ will depend on the identified savings based on the size of your home, the number of occupants and the current size of your bills. Some work, such as double-glazing, may require an upfront part-payment, for example installing an A-rated boiler would typically cost £2,500. Adding further hesitation, some companies are set to charge householders for the Energy Performance Certificate survey and plan. By letting ‘the market’ decide how the deal is offered to consumers, firms are predicted to charge interest at a 7.5% typical rate.
Says Matthew: “In the long term, enforcing set energy efficient standards on new builds is the obvious and instant solution, adhering to the Green Deal’s ethical intentions as well as ensuring the government practices what it preaches.
“When the government eventually implements a council tax which is tied to your environmental footprint, a national surge in green appeal will surely affect us all.”
