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Green Deal could be a poor deal for consumers

Which? speaks out on latest consultation

Green Deal loan image

The Green Deal will provide finance for energy efficiency measures in the form of a loan. 

As climate and energy secretary Chris Huhne launches the government’s consultation, Which? questions how hard-pressed homeowners will have confidence in how the Green Deal might work for them.

The Green Deal is the government’s flagship energy saving scheme, which offers consumers the opportunity to pay for energy efficiency measures through their energy bills. But Which? is concerned that the Green Deal is looking like a poor deal for consumers.

Green Deal ‘golden rule’

One of the key selling points of the Green Deal is that the finance for home energy efficiency measures will be paid off in small instalments. The ‘golden rule’ states that consumers will never pay back more per month than they’re saving on their energy bills.

However, in the consultation launched today, the Department of Energy and Climate Change is proposing 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. 

Average figures – meaningless for many

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

Richard Lloyd, executive director of Which? said: ‘The Golden Rule was supposed to reassure people that Green Deal repayments would not exceed the savings made on energy bills. But if this is based on average figures then it could be meaningless for many.’

Green Deal is a loan

Which? is also warning consumers to be aware that the Green Deal is not an energy efficiency grant. The finance comes in the form of a loan. Anyone taking up the Green Deal will be expected to pay interest. 

The government estimates that average household energy bills will be 7% lower than they would have been by 2020 because of new energy and climate policies. 

However, Richard Lloyd said: ‘This is based on the big assumption that schemes like Green Deal will appeal to consumers. If take-up is lower than expected, energy bills will be pushed up even further.’

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