Government throws in towel on Green Deal ‘to protect taxpayers’

In a statement yesterday the Department of Energy & Climate Change said: “In light of low take-up and concerns about industry standards there will be no further funding to the Green Deal Finance Company, in a move to protect taxpayers.”

Energy secretary Amber Rudd said that the government would work with the building industry and consumer groups on a new value-for-money approach

This decision has no impact on those Green Deal Finance Plans that have been put in place or existing Green Deal Home Improvement Fund applications and vouchers.

The announcement comes as part of government’s wider review of energy policies that has seen zero carbon construction targets abandoned and subsidies for solar and wind energy axed.

Amber Rudd said: “We are on the side of hardworking families and businesses – which is why we cannot continue to fund the Green Deal. It’s now time for the building industry and consumer groups to work with us to make new policy and build a system that works.

“Together we can achieve this government’s ambition to make homes warmer and drive down bills for a million more homes by 2020 – and to do so at the best value for money for taxpayers.”

The government has commissioned an independent review led by Peter Bonfield, chief executive of the Building Research Establishment, to look at standards, consumer protection and enforcement of energy efficiency schemes and ensure that the system properly supports and protects consumers.

Green Deal Finance Company chief executive Mark Bayley said: "We appreciate that the government must review its energy efficiency priorities and we are grateful to DECC for its considerable support over the life of the GDFC. We are also proud of what has been achieved in only a relatively short time: our business has grown from its inception two years ago to over £60m in plans and applications today. We have more than met our mandate of creating a national infrastructure for a pay-as-you-save scheme."

He praise the energy efficiency firms that supported the Green Deal, saying: "Our network of small and medium size firms – the 70 Green Deal providers – have done a fantastic job of making the Green Deal work. Our very strong growth over the past year has been driven by their efforts and investment. We've also provided over £75m in trading lines to our small business partners over the last two years. My priority now is to ensure an orderly closure to new business and to fund eligible plans already submitted by the providers."

Martin Callaghan, chairman of the GDFC, added: "We are obviously disappointed that we cannot develop the Green Deal further but I would like to thank Mark and the GDFC team for their herculean efforts to make the programme work. It is a real achievement that they have built demand to £60m of Green Deal finance plans and applications in the two years since the first Green Deal Plan was purchased."

The British Property Federation (BPF) has urged the government to ensure that the failure of the Green Deal does not impact on the ability of property owners to comply with the incoming minimum energy efficiency standards.

The BPF is concerned that there are many property owners who would have been relying on the Green Deal to finance energy efficiency improvements and reach minimum energy efficiency standards.

Although the Green Deal has suffered from low uptake and there have been concerns over the quality of installations, the BPF considered it  “an imaginative and novel approach to improving the energy efficiency of the nations’ housing stock”.

BPF policy director Ian Fletcher said: “It won’t come as a surprise to many to see that the government has decided to end its financing of the Green Deal Finance Company. Many will use this as an opportunity to bemoan the scheme and its failings, but of greater importance is where we go from here. The end of the Green Deal will impact on many other policy areas including the minimum energy efficiency standards (MEES) passed by the previous government, which was designed to dovetail with a pay as you save energy efficiency scheme.

"We are concerned that without a functioning pay-as-you-save scheme, the premise set out in the regulations that meeting energy efficiency targets should come at no upfront cost to the property owner is now in jeopardy.

 "The end of the Green Deal should not be associated with an end to the government’s support for helping people to achieve warmer homes that are cheaper to heat and better for the environment and we look forward to working with officials on its replacement, but engagement needs to proceed quickly in order that we do not lose momentum or capacity in the market.”

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