Why the Green Deal shouldn’t be limited to a loan mechanism
The benefits of the Green Deal should be available to all, no matter what finance mechanism they choose.
Consumer Focus has long campaigned for energy efficient housing. This is essential to tackle fuel poverty, protect consumers from future fuel price rises, and to cut carbon emissions.
For this reason we welcomed the Coalition Government’s plan for a Green Deal for British homes. Its main feature is the introduction of a new finance mechanism that enables property owners to pay for energy efficiency measures over time through savings on their energy bills.
The Green Deal is intended to incentivize consumers to take action by replacing large upfront costs with smaller monthly payments. This charge sticks with the property as part of its energy bill, so when the consumer moves on, the new resident picks up responsibility to make the payments – whilst benefitting from the energy efficiency measures installed.
It makes sense to us that the beneficiary pays, but we are increasingly concerned that this finance mechanism could be as much of a weakness as a strength:
- Will consumers cover their costs? Property-buyers have told us they are likely to want any outstanding charges paid as part of any property purchase, and tenants are wary of additional charges. This could lead to property-owners being forced to pay off the loan early and incur early-repayment fines.
- Will consumer protections, including redress mechanisms, apply to consumers who choose to self-finance part or all of their works rather than using the Green Deal payment mechanism?
- Will consumers distrust a product that hinges on the use of a commercial loan, particularly if they could finance measures more cheaply through other means?
- Can ethical energy advice providers recommend a product that could lead to disconnection of a home’s energy supply in the event of non-payment?
Our vision has been, and continues to be, a Green Deal that offers a good and fair deal. Such a deal does not hinge on how a product or service is paid for: it depends on value for money.
Experience in Britain and overseas shows that no single policy measure is going to deliver the necessary uptake of energy efficiency measures. So why is the Government limiting the potential of the Green Deal by focussing on the finance mechanism rather than consumer needs?
Put consumers needs first
We are asking for a reframing of the Green Deal around consumer needs, rather than the demands of industry and finance providers.
In summary, this would provide the following elements that are currently missing from the proposed Green Deal:
- Assurance for all: Green Deal accreditation should be a signal to consumers that they can trust a provider, however they pay for energy efficiency measures;
- No Cold-calling: Unsolicited sales of unaccredited products and services should not be allowed during Green Deal visits;
- Advice for all: All householders should be able to receive impartial assessments and clear and comparable quotes to see the potential for their property and choose the combination of measures and finance that’s right for them;
- Quality installation: quality services from day one, backed up by one joined-up advice and redress scheme for all users of Green Deal accredited products and services, not just those who pay by Green deal finance;
- Ongoing protection: consumer protections should be strengthened to prevent the disconnection of energy supplies to vulnerable households, including those with children.
We think this refocus would not only be to consumers’ benefit but would provide assurance to businesses too. Industry is working to tight timescales. A market framework that has two-tier regulations, dependent on how a consumer pays, is going to make every business process more complex with knock-on impacts on staffing, training and software development.
Even if industry decides, as we would expect, to deliver to a single standard, it will still have to communicate to consumers the difference in consumer protections and options for redress, and handle complaints and enquiries from multiple bodies. How does a customer services operator explain to a consumer that their access to redress is limited because they chose to pay upfront rather than through Green Deal finance? And will consumers find this answer acceptable?
A year ago, I heard a great idea at a Green Alliance workshop: that every MP should be asked to take up the Green Deal to prove it works and to put an ‘exemplar home’ in every constituency. I’m not sure now how many MPs would take up that ‘ask’.
So, as we enter the final stages of the Energy Bill and the development of secondary legislation, all we are asking is that politicians and policy-makers put themselves in consumers’ shoes.
Not least because this is a Deal that needs to be attractive to every household… yes, including yours… if the challenges of energy security, fuel poverty and climate change are to be addressed.