Why the Green Deal shouldn’t be limited to a loan mechanism

This is a guest post by Liz Lainé, Policy Manager at Consumer Focus.

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.

And uptake of energy efficiency is dependent on awareness, motivation and affordability.  Again, finance is only part of the behaviour change challenge, so a broader strategy is needed.

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.


  • The is a very interesting article here are some specifib points that concern Energy Efficiency when dealing with Private Leasehold Blocks of Flats

    The Federation of Private Residents Associations feel strongly that issues concerning energy supplies to privately owned blocks of flats are not being handled correctly. We have set out the issues below and would welcome views from readers.
    We are concerned about the supply if energy to privately owned blocks of flats. Many of the landlords of these flats are companies and associations whose members are the owners of the flats in the blocks; we estimate there are 60,000 such companies in England and Wales. These small companies do not operate for profit; they collect service charges to pay for communal running costs and pay out the costs in order to balance the books each year. Some of these companies and associations engage a managing agent to who is delegated the day to day provision of communal services; but the company retains the role of landlord.

    One of the services that is provided in all blocks of flats is the supply of electricity (and sometimes gas) to communal areas-the lighting of halls, stairs and corridors. In addition the utility supply will also run the lifts (if provided), the fire alarm to warn in the event of a fire and emergency lighting to allow evacuation in event of a fire.

    Issue 1 Energy Efficiency

    Grants are available to home owners to assist with improving energy efficiency and some private owners of flats do qualify for those grants. But there is a problem. In order to improve the cavity and roof insulation in flats there has to be a communal approach; it is the landlord who ‘owns’ the roof space and the cavity not the owners who cannot act independently. But grants are not available to landlords of private blocks of long leasehold flats, even if those landlords are the owners of those flats. Landlords who rent can obtain tax relief but this does not apply to landlords of leasehold flats.

    Issue 2 Inability to Change Supplier/Lack of Competition

    The companies that manage blocks of flats wish to obtain the best rates for the supply of gas and electricity to communal areas but they are being prevented from doing so. Why? Because the utility companies treat them as small businesses and run credit checks on them as businesses and find they have no assets; often they will have filed dormant accounts with Companies House. Remember these are not trading companies running a business.

    This approach by the utility companies is wrong because these flat management companies are receiving domestic energy supply-see below re VAT. They are not supplied as commercial customers but the utility companies are applying commercial rules to them.

    Issue 3 VAT and Domestic or Commercial Tariffs

    Under VAT guidance it is quite clear that the supply of electricity and gas to common parts of blocks of flats is a domestic supply- see
    Item 3.2 of Fuel and power notice produced by HMRC which defines what is domestic use.

    The following are treated as part of the same residential unit:
    • buildings such as garages used with houses;
    • subsidiary buildings situated a short distance away, such as a garage in a block located away from a house; and
    • corridors, lifts, hallways and stairways in a residential unit.

    Despite this advice we still find utility companies refusing to acknowledge that a supply to flat management companies is a domestic supply and even if they finally do refusing to backdate the necessary repayment of wrongly charged VAT.

    Issue 4 Disconnection

    The utility companies have put in place a safety net to prevent unnecessary disconnection of vulnerable customers who receive domestic supplies but there is no protocol regarding disconnection of communal areas of blocks of flats. Disconnection of supplies to communal areas of blocks of flats immediately puts at risk the safety of those who live in those flats. The fire alarm and emergency lighting will not be operational and the block should not be occupied in these circumstances. In high rise flats the water supply to flats will normally be pumped and require power to supply.

    We do not condone flat management companies that refuse to pay their debts but this is not usually the case. In order to pay bills the companies and their agents have to collect service charges from lessees who may or may not be in funds to pay. To pursue debtors through the courts and leasehold tribunals is costly and takes time.

    What we seek is a protocol that utility companies will adopt before any disconnection would take place. The Energy Retail Association have faile to adopt such a protocol for blocks of flats.
    A recent case we were aware of had court papers served to the block of flats and left in the communal hallway, rather than to the billing address provided with the managing agent. In another case the local authority had to step in or otherwise many families would have had to be found emergency accommodation.

    Bob Smytherman
    On behalf of The Federation of Private Residents Associations Ltd.

    Disclaimer: – FPRA only advises our member associations – we cannot and do not act for them. Opinions and statements offered orally and in writing are given free of charge and in good faith and as such are offered without legal responsibility on the part either of the maker or of FPRA Ltd. All questions and answers are passed to our newsletter and website editors and may be published (without name details) to help other members.

    The FPRA is a non-political, not-for-profit advice, support and lobbying organisation for our members who include private residential leaseholders, tenants’ and residents’ associations and residential management companies as well as those companies where the leaseholders together own the freehold of their own residential block.

  • I wholeheartedly agree that the Green Deal protections should be extended to all consumers, however they finance their improvements. I’d also like to see a process for accreditation that is strong enough to protect consumers, without being so bureaucratic, expensive and time consuming that small, local businesses are excluded. They are the people who have the access to people’s homes, and can catch people at the best possible time for improving energy efficiency, such as when they are having a new kitchen, or doing other building work.

  • As Liz rightly states there are areas/elements that need to be seriously considered and implemented more than we have witness to date for the scheme to have widespread uptake and achieve the goals for consumers.

    Independence, integrity and consumer protection are key for this to be a successful governement implementation

  • Green Deal property assessments need to be impartial and they will not be if carried out by energy suppliers or installers.

    So who are best placed to carry out impartial assessments? Community initiatives like Energise Barnet because they have the trust of the community they serve which energy suppliers, particularly after the recent price hikes, never will.

  • Thanks for the nice blog. It was very useful about loan mechanism. Keep sharing such ideas in the future as well. This was actually what I was looking for and I am glad to come here! Thanks for sharing such a valuable information with us

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