A senior researcher at the Environmental Change Institute at the University of Oxford has said this week that the Green Deal’s Golden Rule is not a sensible approach as it will prevent many people from benefiting from home improvements and is unlikely to help the UK reach green targets.

Full cost not recouped

Dr Nick Eyre made his comments at the Energy and Climate Change Committee this week. He pointed out that if someone is making home improvements they are more likely to do so because they want to improve the condition of their home and that with most major refurbishments, the full cost is never going to be recouped by improvements in energy costs. The Green Deal is unlikely to be able to finance a large home improvement and some of the types of improvements which are needed to meet 2050 carbon targets will not be covered by the Green Deal Golden Rule.

The Golden Rule states that any home improvement carried out under the Green Deal must cost less to carry out than the overall savings made via energy bills. This way the cost of the loan will be paid via energy bills which will not increase.

Dr Eyre has suggested that the government should rethink the Golden Rule and that it should ensure that consumers are not told that they will make larger savings on their energy bills than are actually possible. He points out that consumers realise that their home improvements will cost them money and that energy savings will contribute to that cost. What would be helpful is knowing to what extent those savings will help. He says that the Green Deal will end up being available only to those who want to carry out cheaper measures such as loft insulation.

Tweaks to Green Deal likely

Meanwhile, Ed Davey has this week conceded that the Green Deal is not perfect and that changes and tweaks are likely. It has been suggested that money from the Funding for Lending scheme should be used to lower the cost of the Green Deal loan to the consumer. This would allow more home improvements to come under the Golden Rule. Funding for Lending is the money which has been offered to banks to encourage lending to small businesses. Unfortunately it has not resulted in the increased lending anticipated.