The Green Deal is a NO Deal
28th November 2012
I attended a lecture about the Government’s new Green deal, delivered last night by Alistair Mumford of RegenSW. He did a great job of presenting an ill-conceived national government initiative that no-one has signed up to yet.
The bones of the Green Deal are this: Government will lend you cash from our shiny new Green Bank to install insulation or other efficiency measures. The loan will be paid back through your energy bill, which will always be equal to or lower than the amount you would have been paying anyway.
Unfortunately, the schemes could be financially disastrous for those who sign up, and are inadequate in their methods to ensure good work is done that will cut emissions.
So what’s the problem?
As is often the case, this appears to be good intentions, mangled by bureaucrats who forgot that people should not be expected to make bad decisions, but they almost certainly will if you make them on their behalf.
One example: the loan will be subject to 7% APR. That’s right, at a time when the Bank of England has interest stuck firmly at 0.5%, and most people could remortgage their property at around 4%, The Green Bank (that’s OUR bank) figured 7% is reasonable. Worse still, the Green Bank has the right to increase the rate by 2% every three years. Over twenty five years, that could happen 8 times, leaving you with an APR of 23%.
Add to this a “lifestyle buffer” added into the repayment amount, an arbitrary sum to allow for changes in energy consumption, i.e. children, plus the fact that cost of the installation itself was mysteriously absent from the sums, plus the rising costs of fuel, (neatly ensuring that “what you would have paid” could be astronomical) and you may as well write a blank cheque to the Green Bank, payable for the next 25 years.
There are many other serious flaws, for example: There is no proper oversight of the installations – they have to be Quality Assured, which is another way of entrusting to pot luck that you will get a conscientious installer who doesn’t simply tell you he or she has filled your cavity/loft with insulation, collect the cheque and leave. Without a proper chain of inspection and liability, a lot of installation will be substandard, will have very little effect on energy consumption or emissions, but will cost a lot of money.
An example of the sort of erroneous work that will be paid for by the Green Deal is shown in the figure below: External wall insulation (or cavity insulation) will not be linked and continuous with soffit or roof insulation. Instead, a thermal bridge (cold spot) is created at soffit level – a schoolboy error masquerading as an approved installation detail. The illustration happens to come from an Irish grant scheme, but I know of at least one instance where it has happened in the UK.
I could go on and on.. but I won’t. The bottom line is: If you want to make your home more efficient, and we all should, borrow the cash at sensible fixed rate and employ an architect to either design and tender the works for you, or recommend or work with a known good insulation/renewables installer or consultant. They do exist, (In Ireland try Young Design Build) but you need to know them and their work before letting them loose on your home – or appoint a professional who can ensure a proper liability.
The expertise to get this done properly is sitting under the Government’s nose: RIBA, RICS, Passivhaus have thousands of competent members ready to take on a national project like this – highly qualified, committed people who would be happy to do extra training if required, but crucially, bring considerable knowledge to bear, already. Link that expertise to a national borrowing scheme fixed at, say 4%, and there was great deal ready to happen. A thousand small businesses could have benefitted, and we could have made proper reductions in emissions.
My message to Government is: Stop reinventing the wheel. Stop being in thrall to financiers and their products. Stop devising massive, over complex, risk-averse schemes. The methods, calculations, details and contracts all exist already. Stop rejecting The Professions, pick up the phone, get some people over and we can sort this out. You are playing a game, the rules of which you do not know, that will result in ordinary people, who are trying to do the right thing, being fleeced while climate change continues unabated.