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Can the Green Deal be rescued?

Which? sets out five challenges to government

Green Deal loan image

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

Which? has challenged the government to improve its plans for the Green Deal to make sure the energy efficiency scheme appeals to consumers.

The government’s flagship Green Deal, which will be launched in October 2012, aims to encourage consumers to make energy efficient home improvements. 

The deal will enable customers to take out loans to fund improvements, with the loan being paid back via savings on their energy bills.

Executive director of Which?, Richard Lloyd, said ‘It’s right that people are incentivised to be more energy efficient but the Green Deal needs to be a good deal for the consumer at the same time.’ 

He added: ‘There must be fairer terms of finance, stronger protection on sales and marketing practices and more accurate savings estimates.’

Without changes to the Green Deal, Which? is unlikely to recommend the scheme to consumers when it launches in October 2012. Mr Lloyd said: ‘With the launch just months away, our message to the government is clear – time is running out to rescue the Green Deal.’

Customers must trust the Green Deal

One of the key concerns with the current plan is that the savings promised to customers may not materialise. The government plans to use average savings figures to calculate what people should repay. This means that if your home has made a lower than average saving on your bill, you may end up paying more than you’ve saved.

If the government wants customers to trust the Green Deal, it needs to make sure that the terms of the finance are fair.

Five Green Deal challenges  

Which? has issued the government with five challenges, which we believe must be met in order to make the Green Deal an attractive proposition.

  • A Green Deal quote must be based on accurate savings estimates. The ‘Golden Rule’ of the Green Deal is that people will not pay back more than they are saving per month on their bills. But these savings must be based on tailored estimates of individual circumstances, such as a household’s actual energy use, rather than on standardised averages.
  • No harsh early repayment fees. As it stands, people who want to pay back their Green Deal loans early could be forced to pay the interest for the entire duration of the loan.
  • Strict rules to prevent mis-selling. The Green Deal presents a great opportunity for companies, and the government must make sure that these opportunities don’t leave consumers vulnerable to mis-selling tactics and confusing deals.
  • Quotes must be clear and comparable. Green Deal quotes must be in a standard format so that they can be quickly and easily compared with other Green Deal quotes, as well as with other financing options.
  • ECO obligation must be fair and cost effective. Alongside the Green Deal, the government is adding an extra charge – the Energy Company Obligation – which will be paid through people’s bills. This money must be spent on low-cost, high-impact work such as loft and cavity wall insulation for those who need it.  

Mr Lloyd said that the changes are crucial if the deal is to be a good one for consumers: ‘Without these significant changes we are unlikely to be able to recommend the Green Deal to consumers.’

More on this…

  • Get more detail on our five Green Deal challenges
  • See if you could improve your home using an energy grant
  • See how else we’re campaigning for affordable energy for everyone
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