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Green deal renovations under way. Photo: Sue Roberts.
Green deal renovations under way. Photo: Sue Roberts.
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The Green Deal is dead. Long live Fossil Fuel Freedom!

Sue Roberts

13th August 2015

The Green Deal was expensive, bureaucratic, complex, inefficient and so badly designed it could have been set up to fail, writes Sue Roberts. Yet it was the UK's only national home insulation scheme and its intentions were sound. What it needed was rethink and reform, not scrapping - and with it gone, there's a huge gap that desperately needs to be filled.

One reason for the high cost is the Byzantine bureaucracy and compliance procedures built into the Green Deal. For example, between you, the customer, and the chap insulating your wall are a minimum of nine bodies, each of which needs to be paid.

The Green Deal - the coalition government's now scrapped flagship programme to eco-retrofit millions of old British properties - looked like such a good idea.

Based on an elegant 'pay as you save' model, it promised warmth, comfort and lower fuel bills for no up-front cost. What's not to like?

Sadly, there was a great deal about it not to like: beginning with arcane, burdensome bureaucracy, susceptibility to fraudulent practice, excessive costs on participating companies, and unviably high interest rates on Green Deal loans.

In fact, the scheme was so badly conceived and implemented that it was doomed from the start. Could it even have been set up to fail?

But now that it's been scrapped, the government has replaced a bad scheme in desperate need of rethink and reform, with nothing at all.

And that's a disastrous outcome that leaves all the companies that have invested in training, certification and marketing and so on up the proverbial creek without a paddle.

A regrettable inattention to simple arithmetic

So here's how it's meant to work. A Green Deal advisor surveys the home, and shows the annual savings that would accrue from insulation, double glazing, a new heating system, and renewable energy generation.

Next, a Green Deal 'provider' takes this up, and sets up a plan, arranging the loan, the installations and the repayment schedule.

Under the golden rule, repayments must not exceed annual savings, so there is no overall increase in bills. The repayments are paid with the electricity bill so the least creditworthy of us may participate.

But why did nobody pay attention to the sums? Apply these criteria and you find that out of all the energy saving measures to be taken, only and handful actually fit the model, mainly because of high project costs and high interest rates.

I discovered this in 2012, when Sustainable Wallingford ran a green deal pilot under a government grant. My organisation, Ecomorph, investigated the costs and savings of ecofitting Glebe House.

We found that only loft and cavity wall insulation, or an extra jacket for the hot water cylinder (costing £15) are sufficiently cheap and effective that fuel savings cover their cost, meeting the golden rule.

For everything else, the loan would have to be topped up with other money. Take a new boiler costing £4,000 and saving £150 a year. Such a saving would cover loan repayments of only £1,000. So you would be £3,000 short.

Unworkable bureaucracy raises costs

One reason for the high cost is the Byzantine bureaucracy and compliance procedures built into the Green Deal. For example, between you, the customer, and the chap insulating your wall cavities (costing say £600), there are a minimum of nine bodies:

  • There's me,
  • the green deal advisor;
  • Ecomorph, which I had to set up to audit myself;
  • Stroma, the certification body that audits me auditing myself;
  • there's UKAS that audits Stroma;
  • the Green Deal Oversight and Regulatory Body, auditing everyone;
  • Ofgem and Gemserve off in the wings somewhere;
  • and then there are similar arrangements for the green deal 'provider' and the green deal 'installer'.

Then there's all the financial regulation surrounding the loan. The green deal 'finance company' was set up to find finance, chiefly from the Green Investment Bank, and then make loans via providers.

Therein lay another huge fail. The arrangements for tying the debt to the electricity bill are so convoluted that the meaning of the word 'debt' had to be redefined in the Consumer Credit Act!

And of course, we all have to be paid. Installers have told me that the raw cost of installing cavity wall insulation is inflated about two and a half fold under the Green Deal. So the final bill for £600 worth of cavity wall insulation ends up being £1,500.

Cost of finance double the mortgage rate

As we geared up for the green deal, the interest rate to be paid on the loan was kept very quiet, or still had not been dreamed up. There was a collective groan that rose from the industry when it was announced at 7%.

That's because any householder seeking to improve their home could do so at a fraction of the cost extending their mortgage - and without having to go through the monumental bureaucracy of a Green Deal plan.

The finance company responded to a recent letter I wrote to the Guardian (27th July 2015) complaining about the high interest rate. saying that 7% was the cheapest they could loan at, as they had to pay interest on the money they borrowed.

They claim their operating costs were low as they merely rented premises in Paddington. But why Paddington? Why not Liverpool? Why were they paying an £80,000 average salary for the 12 workers in 2014?

Not to mention a £400,000 salary for the chief executive, who was only managing as many people as work at our local Nationwide? From whom, incidentally, one can borrow money at half the Green Deal interest rate, 3.5%.

Involvement of energy companies

An incredibly complex grant system was created with the Green Deal. Energy companies are required to make retribution to society for their carbon emissions. Previously this was through free loft and cavity wall insulation to low-income households.

This stopped dead in December 2012 whilst the new unworkable system started to crank into being, leading to the collapse of the biggest and the best insulation companies, such as Enact.

Under the new system, providers gather up a number of green deal plans to sell carbon savings at regular auctions to the big six energy companies. How weird is that? The big six are obliged to make Energy Company Obligations, ECOs, for any and all energy efficiency improvements in certain low-income households, and for insulation of solid walls for everyone.

Hijack? Fraud?

The majority of green deal plans have been for new gas boilers. To my surprise, the government approves what looked to me like a massive fiddle, where an advisor pretends that a house is heated by electric fires rather than by its old gas boiler, exaggerating the carbon gain that the energy company can claim when it replaces a boiler.

It took the providers aeons to get their green deal accreditations, and though I would frequently phone around to find one able to access ECOs for my customers, none could.

Meanwhile, the energy companies set themselves up as providers, with their own 'impartial' assessors and installers. The finance company state that their main goal was to provide loans via the energy companies. The rest of us were left out in the cold.

And not only us. Frank, an elderly, disabled gentleman on a very low income, was one of the first whose home we assessed. We found it severely wanting, with single glazed windows and an old boiler. I could not find ECO funding for him, there were no providers able to help, and glazing, curiously, was not a fundable measure.

I received regular, plaintive requests for help, and received blandishments on his case when I wrote to his MP, Tony Baldry. Ultimately I found someone from his community to put clingfilm over the windows.

And Mary, an elderly lady who engaged Anglian windows to put in double glazing. I assessed her home, and was delighted to tell her that she could claim £2,000 from the green deal home improvement fund, provided Anglian windows were Green Deal accredited. Their website said they were!

The home improvement fund was set up by government as a stop gap for grants, given that ECOs were invisible to ordinary mortals. Of course, she received nothing: Anglian had let their expensive accreditation lapse.

What next? Fossil Fuel Freedom

Some excellent structures were created in the Green Deal, which after all was a beautiful construct, poorly delivered. I like the assessment process best. With our varied housing stock, each home needs a bespoke solution, which this provides.

I wrote at frequent intervals to government in the following vein:

  1. Green Deal assessments should be free. The early rollout of free assessments was a great success, and informed householders as to what actions they should take.
  2. Grants should be clear, easily available, and enable full installation of useful measures, paying for costs that exceed the golden rule.
  3. The loan should be at zero interest and regarded as a 'reverse feed in tariff'.
  4. Bureaucracy should be reduced. I would work for far less cost and in a more accountable way as an unfettered adviser, and I offer up Ecomorph, my Green Deal advice organisation, as a sacrifice.

So let's begin again with a new scheme that builds on the Green Deal's successes and learns from its failures - complete with a new name. How about 'Triple F', for Fossil Fuel Freedom? The energy companies will love that.



Sue Roberts blogs at and manages Ecomorph. Follow Sue on Facebook and Twitter @DrSueR


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