The Green Deal’s ‘golden rule’ has lost its shine

by , Campaigns Officer Energy & Home 24 November 2011
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Yesterday the government unveiled the details of its flagship energy efficiency initiative, the Green Deal. Sadly, its crucial ‘golden rule’ means that joining the scheme may not work out to be such a good deal after all.

Green house

The idea behind the Green Deal is that people take out a long-term financial agreement to pay for energy-saving improvements in your home. This loan will be attached to the property, not the individual, and you’ll repay it, with interest, over many years.

In theory, under a ‘golden rule’ the repayments must be less than the savings on the energy bill. But yesterday’s announcements proposed that the basis for how much a consumer should pay back will be based on average figures rather than figures tailored to their own energy usage.

This means that many customers could potentially be paying back far more than they are saving on their energy bills.

Barriers to energy saving

Cost isn’t the only barrier to taking up energy saving measures. There are lots of free and subsidised insulation offers out there right now, and yet energy suppliers struggle to get people to take them up. People are often put off by the ‘hassle factor’, such as clearing the loft before insulating it.

Add to this the fact that only a quarter of us think energy companies are trustworthy and it’s hard to imagine customers flocking to make their homes energy efficient via the Green Deal.

What will make the Green Deal a success?

First, people need to be confident that it makes good financial sense. The so-called golden rule has to be tailored to each person’s property and their own energy usage – and must not be an ‘average household’ figure.

If the golden rule is calculated in a generic way, then whether you live in a big detached house or a small terrace, it will be meaningless. And if the interest rate is too high or the repayment system is too complex, then people are not going to sign up.

Next, when the benefits of the Green Deal are communicated – it must be in simple, easy to understand language. There must be no misleading talk of ‘free insulation’ or incentives to take up the deal, which are nothing of the kind. Yes, consumers won’t have to pay upfront costs, but over time they will have to repay the costs of the Green Deal in full, with interest.

Finally, people tell Which? that they prefer energy efficiency advice to be independent of the companies selling them the measures. The package of measures recommended by companies must be something that the consumer can trust is going to be the best deal for them. And we need robust monitoring and reporting about the impact of the Green Deal on energy bills.

Despite the information in yesterday’s ‘Annual Energy Statement’ from Chris Huhne, there is not sufficient transparency about the amount of money government policies add to our bills.

Which? wants the Green Deal to be a success. But unless people are offered a good deal that is easy to understand by a company that they can trust, not enough will sign up. The government’s aspirations for the Green Deal are admirably high. Now it must show that its proposals will deliver for consumers.

19 comments

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John Symons

As a loan scheme, the Green Deal is better for people like me than paying through utility bills so that other people can have things free that do not apply to us. I have double glazing, no loft, no wall cavity and female family members who always feel cold when I am warm.

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Chris, Gloucester

If this is the Governments “flagship policy” the fleet is doomed.
Unless the consumer actually pays less in energy bills from day one this is going nowhere.
Take an example.
A new condensing gas boiler costs about £2000 (often much more from an “approved installer”) and will last say 10 years (if you’re lucky). The repayments are going to have to be, including a little interest, something like £210 to £220 a year. So that much has to be saved in energy cost before there is any incentive at all.
I don’t think the saving and sufficient incentive is really there for most so why go for it?
Do the same calculation for things like double glazing, heat pumps, renewables like PV and solar hot water and the result is worse.
However to be fair there probably would be an incentive for cavity wall and loft insulation, but that is already available free for many and at low one off cost for all. Even then the take up has been less than perfect because many people are lazy or have some notion that they’ll get damp issues or whatever.

I suggest the government needs to think again, perhaps more along the lines of much much better cost subsidy for energy effiency improvements. They could use that £11 billion it will cost to roll out that waste of money which is the so called “smart meter” programme.

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Isobel

Many pensioners own flats where cavity wall insulation would cost them nothing but would mean other residents in the same building would have to pay. So a pensioner has the choice of holding their neighbours to moral ransome, or embarrassing the ones who can’t afford it – so is it any wonder they don’t apply?

I suggest that cavity wall insulation at least is provided at no cost to the whole block if there is at least one resident who qualifies for its free provision.

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William

I have a small amount of loft insulation so no supplier will touch me to do it for free. In fairness I don’t trust them anyway.

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Chris, Gloucester

William,
The general rule is if you have 60mm or less they’ll top up with another 200mm. In practice if your insulation is not above the joists they’ll top up, and that could be approaching 100mm on top of which then goes another 200mm.
Free if you’re over 70 or on a qualifying benefit or up to £150 for anyone. Some energy suppliers are installing to anyone for free but that’s probably a temporary offer and in some cases is linked to boiler service contract or at the very least a hard sell for some other product.
I can understand you not trusting them but in the vast majority of cases everything goes just fine. I’d suggest shopping around a bit to find an installer that gives you a warmer feeling.
However at the end of the day no one will or can force you to insulate and reduce your gas bill, but I’d recommend you do it.

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austin

Quite right not to trust then William. I paid for insulation, which never went into the roof, and was told that was what happened. I asked them to leave the spare insulation, that I had paid for, and they wouldn’t. Only about half the loft was covered, the rest they wouldn’t cover as it was a walk way. We had nothing in the loft, it was all cleared out.We don’t use the loft.

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Alan

I think it’s pretty clear that governments of whatever hue are never on the side of the consumer. The Green Deal is a way for energy companies to get round their legal commitments cheaply. The only people who’ll be better off in ten years will be those companies.

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barney

green issues go out the window when plymouth city council and others plan to install an incinerator almost at sea level with a 95 metre stack on the edge of the city in s west position to burn household waste fromthe whole of south devon estimated 150.000 tons the prevailing s west winds will send pollution over city and north winds over saltash in cornwall ,it is claimed that gases will be cleansed but co2 and toxins are bound to be present ,a cynical move is the planning meeting which might finalise outcome is 2 days before christmas,

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tourmentin

I am rather sceptical of the whole “green energy campaign”. I think the provision of it will cost far more than the benefits it will produce. Secondly, I really can’t see what difference the UK’s small contribution will make to the global scheme if the US, China, Russia and India don’t do a whole lot more than they are doing already!

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Grey diver

You are right – there is no coherent policy, just a jumble of modish “initiatives” that will make no difference. Householders have a single objective – to save energy costs on a nett basis. Governments and all the parasitic quangos (led by the ICCC) have a confused desire to:
- eliminate or reduce the climate change predicted by their computer simulations
- move from fossil fuels to “sustainable” fuel sources, in the erroneous belief that the first are in short supply and the second not ruinously expensive and unreliable.
- pander to the modern Green cult, which is more and more taking on the trappings of a New Age religion. Perhaps there are votes in it, but not much sense.

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ADO ADO

I personally do not think the green deal will work, it’s ill conceived with no real thinking behind it and undoubtedly will leave the lower paid who probably cant afford it in the first place cannot take up the option on financial grounds. I considered myself to be fortunate enough to have free insulation installed, but come the day I was informed that only the attic and front facia to the house could be insulated, This left the rear of my property which bears the brunt of cold winds uninsulated and all because I have a lean to conservatory on the back of my home. No doubt the installer charged the local council for a full instalation as they were sub contracted company.

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silverthread

Surely, no-one in their right mind will trust anything that is suggested by this government. It will be cheaper to take out a smaller loan and find your own company to do the work. Those companies cannot be trusted either. I asked Homeserve for a quote to repair my boiler. It was £780. I then got a local plumber to do the job for £250. A government licensed company came to insulate my walls. I had to pay £150 for less than a couple of hours work. They made such a mess and left several holes unsealed, whilst inside the garage I had to clean up where they had drilled through the walls and the insulation beads had fallen through. I had to get them to come back to finish the job and the final work was not good. They rushed to get to complete as many homes as possible and no-one came to check-up to see if they had carried out the work as required. I would never take out such a green loan because I don’t know to what extent the repayments will go up as interest rises, how much of my loan will go to pay the executives in those companies huge salaries and pensions. Even Huhne himself looked uncomfortable during the Newsnight’s interview and said nothing to make me change my mind.

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themadmajor

As someone who has monitored the crafty subtle moves of government for a very long time it is difficult to see how this system one will be any different to those of the past.

Most government schemes get taken over by the well healed middleclass (socio-economic group B and above)which is often the real intention of all governments anyway in their quest to make the rich richer and the poor poorer. I have seen how even the so-called Labour government during the 1970′s ensured that in respect of home improvement grants those that needed them the most were pushed out because they were expected to make the whole house up to “Parker-Morrison” standards rather than be given a smaller loan for something most essential such as an indoor bathroom. And what happened to those Parker-Morrsion standards one must ask? They were relinquished.

By using a scheme based on average energy use it may well favour those who consume the most fuel rather than those who do not and that will favour the middleclass and as such those with the most money who do not really need any more help.

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Richard, Llandrindod

The Green Deal is another government con trick. It’s a loan with interest that is presented as though it is a grant or subsidy. It’s relatively meaningless and will rapidly die. How do people like Huhne manage to reach ministerial level and produce policies that are so unrealistic that they repeatedly have to be withdrawn?

I just hope the recession will also cause the government to abandon the false dream of wind power which, if continued, will be an enormous financial folly for no improvement in emissions, energy production, energy security or savings whilst destroying the landscape forever. I have seen no plan to incorporate penalty clauses to force installers to remove windfarms, substations and pylons at no cost to the consumer or taxpayer if their utilised outputs fail to meet those claimed in justifying their construction.

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OAP Rob.

This is another “pie in the sky” scheme dreamed up by the unworldly Lib Dems. It is totally impractical due to so many factors being based on guesstimates. I already have had loft insulation topped up and cavity insulation installed under the “Free” schemes run by my energy supplier. (Actually paid for by surcharges on everybodies’ utility bills) My double glazing has also been upgraded at my own expense. However, I can honestly say that there has been no quantifiable reduction in my utility bills after these changes. There is obviously no way of measuring any such savings that may or may not occur in order to set repayment levels. Any reduction that may have
been achieved would have been immediately swallowed up by the next price increase, as will any
savings produced by the green deal. The whole energy saving scenario is being thrust upon us, the consumers, due to the failure of recent governments to maintain and improve our sources of energy
generation.

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Liz

I’m unable to check on the efficiency of the work done on my house. I have neither the strength, energy or ability and no one came to check on the work was done. The back and side wall is meant to be insulated.The loft is meant to be covered by the correct amount of insulation and my radiators have had foil placed behind them (rather carelessly.) I have secondary double glazing on my windows but I am nor convinced that this has made much difference. It’s true that I don’t get frost on the inside of the windows but I do notice that the temperature in my front bedroom goes up and down considerably with the outdoor temperature during the night. I don’t think it has made any difference to the amount of fuel I need to use, it’s impossible to judge.
The only way to save money is to dress up as warmly, move around a bit and put the heating on as little possible. I coped that way very well in the cold winters in the1940′s and 1950′s

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bene

I’d far prefer to see more power stations being built: the power is reliable and it is available whatever the weather is doing.
I feel very strongly that these madly expensive wind-farms are the most grotesque waste of money: hugely expensive to buy and instal, enormous payments to landowners, and then to top it all, vast payments NOT to operate… when the weather is too bad.
If we could each have our own generating system [not as mad as it sounds, for individual and remote farms in Scotland, for instance, their own small wind turbine generates the electricity they need] – that might make some sense.
the proposals outlined won’t make financial sense to most households, will they?!

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Gordon

I dont know enough to comment on the green deal however given the past attempts by the Government i would suggest this is just another dream which will keep them in their well paid jobs until someone advises them different.
Just a tip for you lot to save a few pounds is o replace your existing ligh bulbs with low cost LEDs
I purchased from a local company Solutions Inspired that knocked on the door
Typical saving is fact as they changed my 60 watt bulbs with 1.8 watt and 3 watt bulbs the bulbs were a bt more than the standard fittings but pay for themselves witin 7 months
Jobs a gooden

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Paul

As both a commercial and domestic Energy Assessor I am leaving the industry as I believe the Green Deal is the next major miss selling scandal waiting to happen. The reason for this is the Golden Rule states that all improvements are paid out of energy costs saved, but they will not pay off the costs of boilers etc before they will need replacing and the only person who can be sued is the Energy Assessor as they have to retain the assessments for 15 years. As the Green Deal Assessor has to sit down with the client and discuss how the heating is used and take note of boiler program times and settings, TRV settings and room temperatures, then the charge of an inaccurate assessment can easily made an exceedingly difficult to refute.
Any policy devised by politicians that takes money from the poor in the form of higher energy costs and give subsidies to the better off will ultimately fail. The idea that a Green Deal charge will be passed on at the sale of the property is farcical as the seller will have the price of the property chipped to take account of the existing loan, making these properties unsalable as the occupier will not be able to accept these lower offers as the length of the loan may be up to 25 years and the interest will be the major part of the loan.

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