Group to examine government subsidy for Green Deal loans
A new task group on the Green Deal could suggest that the government subsidises the programme in order to cut interest rates, its chairman has said.
Christoph Harwood, who is chairman of the UK Green Building Council’s new task group on the Green Deal, said the group would keep its focus on the extent to which interest rates on Green Deal finance are a barrier to uptake and would not look in detail at other problems with the scheme.
Mr Harwood, who is a partner at environmental finance firm Marksman Consulting, said the group could then look at how rates could be lowered if they were found to be a problem.
He said: “Other things [we could look at] could be what is it going to cost the government to subsidise it to bring it to a level that is workable.”
He said the group would not provide recommendations but would “inform the debate”.
By September, only 57 Green Deals had been completed even though 85,177 properties had been assessed since the scheme’s launch in January, according to government figures published last week.
However, the Department of Energy and Climate Change figures do not include householders who made improvements to their home recommended by a Green Deal assessment but chose to pay for it without using Green Deal finance.
UK-GBC said the current rate being offered by the Green Deal Finance Company is 6.96 per cent, with the APR for Green Deal Plans ranging from 7.9 per cent to 10.3 per cent.
The interest rates have been cited as one reason why take-up of Green Deal finance has been low.
UK-GBC also said reducing the rate could allow more measures to meet the scheme’s ‘golden rule’ whereby the cost of the improvement must be exceeded by the value of energy saved.
The Green Deal Finance Company argued that its 25 year loans are the only financial product on the market offering a fixed rate of interest for more than ten years.
A number of contractors have complained about the low numbers of Green Deals done.
Carillion is undertaking a £40m restructure of its energy services business, blaming slow take-up of the initiative for the move.
The contractor is among 16 members of the UK-GBC task group, which also includes Gentoo, Keepmoat and Willmott Dixon, with The Green Deal Finance Company as an observer.
The task group will present its findings in January 2014.
Source: CN Plus