The Green Deal

The Green Deal is UK government policy. It was given a 'soft' launch by the Department of Energy and Climate Change on 1 October 2012 to permit loans for energy saving measures for properties in Great Britain and was officially launched in January 2013. These measures were designed to enable consumers to benefit from energy efficient improvements to their home. The loans are repaid through energy bills and transfer with the property rather than those who took out the loan. This means new tenants or owners become liable for a debt they did not enter into, a novel concept in English law. Homeowners (or businesses) will be liable to repay the Green Deal charge, even if the promised saving on their energy bills does not materialize. The intention is that savings on energy bills will outweigh the cost of repayments. This is referred to by DECC as the golden rule. However, the so-called “Golden Rule” isn’t so much a rule as an aspiration. There are 45 different improvements covered by the Green Deal and Government estimates say that a typical three bedroom semi-detached house could save £270 a year from solid wall insulation. The loans became available on 28 January 2013.Although Green Deal assessments could be conducted from 1 October 2012, none were done in the first month and only five had been completed nationwide by 28 January 2013. The scheme requires an assessment of £150 or more to determine what if any work can be done. The cost of this is likely to deter many people. The Government believes Green Deal loans will be repaid at a rate no more than 6.92% - this is significantly higher than average household loans. On a loan of £5,000, the overall rate that is repayable is just under 8% over 10 years, or 7.7% over 25 years. Further to these charges there will be an initial set up charge followed by a £20 annual fee. Failure to repay a Green Deal will lead to disconnection of gas and electricity supplies. Recent surveys have found little awareness among the general public for the Green Deal. The high interest rates and charges of the scheme have been heavily criticized.In its first six months 38,259 Green Deal assessments had taken place. However, only four Green Deals had been taken out.Lack of demand for the Green Deal with cuts to the ECO programme have left the energy efficiency industry struggling, the lack of demand has led one company, Domestic & General Insulation, to completely withdraw from the market and will likely lay off 600 staff.In 2014 a second Green Deal was launched, as grants rather than the loans which had underpinned the original schemeIn July 2015 following the election of Conservative Government The Energy Secretary Amber Rudd announced the Green Deal would be scrapped as it had failed to deliver its objectives. There was no opposition to the scheme being scrapped but there was concern that there was no replacement scheme. In total 15,000 Green Deals had been issued. Former Climate Change Minister Greg Barker stated he was confident that the private sector would pick up the slack from the withdrawal of Government funding