Greg Barker: Green Deal boost is just around the corner

5th July, 2013

EXCLUSIVE: Minister insists scheme is poised for rapid growth, reveals government could look to improve incentives. As the Green Building Councils' John Alker observed following yesterday's publication of the first figures on Green Deal take-up, "it is very difficult to put a positive spin on only four Green Deals being signed". Difficult, but not impossible, if you believe Climate Change Minister Greg Barker, who is insistent the flagship energy efficiency scheme is making hugely encouraging progress, despite the fact not a single household has yet completed the process for taking out a Green Deal loan.

Speaking to BusinessGreen yesterday, Barker defended the scheme's performance and predicted that it is poised for rapid expansion during the second half of the year. While critics of the government's handling of the scheme have highlighted the fact only 241 households out of the 38,259 that have undertaken Green Deal assessments have signalled their intention to take out a loan, Barker is adamant that there is entirely logical explanation for the low adoption rate.

We must find ways to boost the Green Deal How to make the Green Deal a good deal "Green Deal packages have only been available from one company since May and the other four companies have started offering it in the last few days," he explains. "The take-up is low because it has simply not been available. The Green Deal Finance Company switched on in April, but it took several weeks for the providers to negotiate terms with the company. The lawyers had to negotiate their own terms, and then they had to test the systems." It was at this point that several of the providers identified software and legal "glitches" that needed ironing out, further delaying the launch of some Green Deal services.

Barker argues lessons have now been learnt and the second wave of companies to offer Green Deal packages will enjoy a smoother process as they prepare to launch. "The encouraging thing is there are up to 50 companies looking to come online in the next few months," he adds. As such, the Department of Energy and Climate Change (DECC) remains confident that following a slow start the Green Deal will gather significant momentum during the rest of the year. Barker is looking forward to Kingfisher and a number of other high-profile names launching Green Deal services from September, significantly increasing the reach of the scheme. "Some players want to come into that market at the start of the new heating market season in the autumn," he says. "You don't launch an Easter Egg in September and the best time to promote heating technologies is in the autumn when people start to turn their heating on again. That is when people are thinking about heating, not when they are packing their cases to head off on holiday."

Yesterday's DECC figures suggest the pipeline of potential Green Deal customers is expanding at a pretty rapid clip. But Barker's upbeat assessment is unlikely to appease those critics who accuse the government of fumbling the launch of the scheme. Shadow Climate Minister Luciana Berger yesterday accused the government of being asleep at the wheel at a time when thousands of people in the insulation industry have lost their jobs as a result of the Green Deal's slow start. "The fact that over 99 per cent of people who had a Green Deal assessment didn't want to take out a package should be a wake-up call for the government," she said. It is not good enough for ministers to shrug their shoulders and dismiss this as a slow start. Under this incompetent government, thousands of workers in the insulation industry have lost their jobs. Households need help with their energy bills now - not in 10 years' time."

Friends of the Earth's Warm Homes Campaigner, Dave Timms, was equally critical, arguing that the "disastrous" adoption figures proved the government needs to take urgent action to save the scheme. "Today's figures are a disaster but not unexpected - the Green Deal's potential has been absurdly overhyped by ministers to cover the fact they didn't have a comprehensive strategy for insulating the UK's cold, expensive-to-heat homes," he said. "Lower interest rates, more incentives and tough regulations on landlords to improve the worst insulated rented homes would all increase the take-up of energy efficiency measures." But Barker is insistent that it is too early to brand the scheme a failure, reiterating that the Green Deal packages have only been available for a few weeks. "Once we have had Green Deal providers online for several months, that is when we can make an assessment on whether it's working," he says, adding that despite the slow start there is still a broad consensus across industry and Westminster that the scheme's underlying pay-as-you-save financing model is the right one.

Interest rates However, in comments that will please those businesses and campaigners calling on the government to take action to drive adoption of the scheme, Barker admits DECC will consider ways to improve the scheme. "We will want to see in the light of hard market data where we can improve the scheme," he says, adding that if there is evidence that adoption rates are remaining too low the government will look at how new incentives, regulations, and improvements to the financing process could help to make the scheme more attractive. And what of tackling the scheme's interest rates? "Interest rates are the last thing we would look at," Barker says. "That is not on the table at the moment. If Labour want to say the interest rates should be pushed down that's fine, but they have to explain how they would pay for it."

With the Treasury confirming DECC will face further budget cuts in 2015/16 Barker is resistant to proposals that would require the government to subsidise the scheme's interest rates. He is similarly dismissive of suggestions, voiced in the Guardian this week, that the scheme is in danger of becoming a middle class subsidy, whereby people pay for energy efficiency improvements themselves, but still claim their share of the 125m cashback grant scheme the government launched to promote the Green Deal. "I totally reject that," says Barker. "The whole point is that the incentive is there to drive the market and that's what people are doing and that's what we want. I'm glad it's driving people to take advantage of the scheme and driving their own savings... We've been pleasantly surprised by the number of people paying for improvements themselves. That is equally good in my book. The Green Deal is a means to an end, so if people have an alternative source of finance for the work that is fine."

According to the government's figures, over 5,000 cashback vouchers have now been issued suggesting significant numbers of people are indeed funding energy efficiency improvements themselves. With yesterday's figures also showing the ECO scheme has delivered around 80,000 energy efficiency improvements, Barker is indeed able to put a positive spin on the disappointing Green Deal sign-up figures. But DECC will also be all too aware that the clock is ticking for the scheme to demonstrate that it is making rapid progress. Barker is reluctant to put a deadline on when the government will have to make a call on whether the scheme is working, acknowledging only that we'll have a better picture of how the scheme is operating by the end of the year.

Suffice to say that government and industry alike will be desperate to see a significant improvement when the next set of figures are published in three months' time. If the take-up figures are still in the doldrums at that point then the clamour for the government to admit that the scheme is failing and introduce new incentives will become deafening.


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