Public funding for Green Deal scrapped after low take up

23 Jul 15

Energy secretary Amber Rudd is to end to government funding for the Green Deal Finance Company in order to protect taxpayers from both low take up of home improvements and concerns over industry standards.

Rudd said today that the take up of finance from the company for the Green Deal, which is intended to provide loans to homeowners to undertake energy efficiency improvements, had been low and was now not best value for taxpayers. Future releases of the Green Deal Home Improvement Fund will also be stopped, she said.

Ministers will now work with the building industry and consumer groups on a new approach, although this decision has no impact on existing Green Deal finance plans.

“We are on the side of hardworking families and businesses – which is why we cannot continue to fund the Green Deal,” she stated.

“It’s now time for the building industry and consumer groups to work with us to make new policy and build a system that works. Together we can achieve this government’s ambition to make homes warmer and drive down bills for one million more homes by 2020 – and to do so at the best value for money for taxpayers.”

Following the formation of the GDFC by energy firms and other industry partners in December 2012, the government provided it with a £34m loan last October, intended to replace a previous financing plans with the Green Investment Bank.

In its response to the announcement, the GDFC said it been in discussions with DECC to extend this to £95m, with the company then to approach capital markets in early 2017 in order to raise finance for energy efficiency measures in over one million homes.

However, as a result of the decision to not extend the loan, the firm was now not accepting any Green Deal financing applications.

Chief executive Mark Bayley said that the decision to close applications was taken in order to make sure it can meet all its expected liabilities.

“We appreciate that the government must review its energy efficiency priorities and we are grateful to DECC for its considerable support over the life of the GDFC,” he added.

“We are also proud of what has been achieved in only a relatively short time: our business has grown from its inception two years ago to over £60m in plans and applications today. We have more than met our mandate of creating a national infrastructure for a pay-as-you-save scheme."

Responding to the announcement, the UK Green Building Council said that both the Green Deal and the government’s wider energy efficiency plans were “dead in the water”.

Chief executive Julie Hirigoyen added: “While the Green Deal was by no means perfect, the principle of enabling households to install energy-saving measures without paying upfront costs was sound. The irony is that the scheme was finally becoming established and the number of plans was growing.”
 

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