Saturday 30th June 2012
By Luciana Berger, Shadow Climate Change Minister
Over the past few weeks the government’s flagship energy efficiency policy, the Green Deal, has lurched from one setback to the next, caught in the middle of two competing factions in the coalition.
On the one side is the Tea Party tendency in the Conservative Party-those Tory MPs who do not believe in climate change, or do not think it is worth bothering about. For them, attacking the Green Deal is just another way of undermining efforts to cut our carbon emissions and proves how out of touch they are with families struggling with soaring energy bills.
On the other side are ministers responsible for the Green Deal, who are just as out of touch with ordinary families affected by the cost of living crisis, and do not seem to understand that unless serious improvements are made to the scheme, the public just will not want to take it up.
Labour absolutely wants the Green Deal to succeed.
Instead of trying to force it on to the public, ministers should focus on improving the Green Deal to make it as attractive as possible, delivers savings for hard-pressed bill payers and offers real incentives so millions of people want to take it up.
And it is not just Labour saying this. In recent months the CBI, Which?, the Federation of Masters Builders, the Construction Products Association, Green Alliance and even the Government’s own advisors, the Committee on Climate Change, have warned the Green Deal will fail without significant improvements. Unfortunately, right now it seems that the government is not in the mood to listen.
Consumers need to be offered affordable rates of interest on Green Deal loans. That is absolutely crucial to making the scheme a success. Polling conducted by the Great British Refurb Campaign found that only 7 per cent of homeowners would be interested in taking up the Green Deal if the interest rate is 6 per cent or above.
Yet worryingly a report by environmental think tank E3G says that relying on commercial loans-as the government plans-will mean interest rates as high as 8 per cent. While modelling by London-based home improvement firm, Crystal, shows that even with a 5 per cent interest rate, measures taken out under the Green Deal would cost twice as much over the lifetime of a plan, compared with paying for them upfront. Finance at those kinds of rates will not be attractive to most people, limiting demand and leaving the Green Deal struggling to get off the ground.
One solution is the Green Investment Bank. The government announced last year that one of the priorities for the Bank is to provide support for the Green Deal, but they have not specified what form that will take. It is vital that any capital made available is used to secure affordable, attractive interest rates for consumers, in order to lower the cost of Green Deal packages.
Also small businesses should be allowed to compete with bigger companies on a level playing field.
Labour’s vision for the Green Deal is one where small businesses, co-operatives, local authorities, charities and social enterprises are able to participate alongside the big six and other large companies that take part in the scheme.
The proposals in the government’s consultation currently restrict full access to the Energy Company Obligation (ECO), which will provide subsidy for energy efficiency measures, to the Big Six energy companies.
These proposals not only limit smaller providers from competing on a level playing field across the whole Green Deal market but also further entrench the dominance of the big six in our energy market. Labour wants to see the Green Deal open to all types and sizes of providers by allowing equal access to the ECO.
And lastly, the Green Deal will only be a success if it delivers extra support for the fuel poor.
Soaring energy prices means more people are at risk of being fuel poverty. Yet despite that the government plans to offer much more support to households which can afford to improve their homes than to help those in fuel poverty.
Labour believes the funding from the ECO should be split equally between fuel poor homes and hard to treat homes, with a focus on low income hard to treat homes, over able to pay households. That would drive carbon reduction while ensuring that we put those who need help most, first.
With time running out until the Green Deal launches, the government needs to end the uncertainty, stop the infighting and focus instead on developing a credible way to deliver new jobs and lower energy bills.