The abject failure of the Green Deal is clear as statistics show sharp fall in home insulation measures

The Green Deal is the government’s central energy efficiency programme. Since January 2013, householders are able to borrow money to finance measures in their home to reduce heating bills. Uptake has been slow: only 12 homes have taken out a Green Deal loan so far. The government is keen to point out that other householders have financed improvements from their own cash, or their landlord has carried out the improvements for them. Nevertheless, the catastrophic impact of the switch to the Green Deal as the main mechanism for improving the nation’s housing is becoming clearer. Statistics released last week by DECC show that the rates of new wall and loft insulation are running at less than a quarter of 2012 figures. Fuel poverty is becoming an increasingly severe national problem and the switch away from the relatively successful pre-2013 government programmes is looking increasingly mistaken, or to put in more emotional language, wholly wrong-headed. Why are commentators not shouting louder about this appalling setback to the attempts to reduce heating bills and carbon emissions? This is a vitally important issue - tens of thousands die each winter from the effects of cold homes - but the media wrongly treat home insulation as inconsequential and tedious.

The UK’s housing stock is badly insulated. Many homes don’t have proper depths of insulation in the loft and a large number of houses have unfilled cavity walls. Homes built before 1925 generally have solid – and very expensive to insulate – external walls. Along with improved heating systems (such as new condensing gas boilers) the Green Deal, and all its predecessor schemes, have targeted home insulation as the best and most effective way to reduce home energy use. Other things can help, including double glazing and draught proofing, but better insulation of the external surfaces of the house offers the best scope for cutting energy bills.

The unvarnished facts are that between 2008 and 2012, the average rate of cavity wall insulation was just under 700,000  a year. As the Green Deal replaced older programmes, new cavity insulation in January to July 2013 fell to 110,000 homes, or 220,000 on annualised basis. Improvements in loft insulation were recently running at well over a million a year, only to fall to an annualised rate of 240,000 in 2013. Similar sharp rates of decline were seen in solid wall insulation, but from a much lower and more erratic base.[1]

 

Chart 1: Rates of new cavity wall insulation

 

CWI

 

Chart 2: Rates of loft insulation resulting in depths of more than 125mm

 

Loft insulation

 

Chart 3: Rates of solid wall insulation

Solid wall insulatio Across these three key measures, installation rates have fallen by over 75% from 2012 with the fall in loft insulation being the most dramatic. There is no obvious explanation other than the end of the old programmes and the introduction of the Green Deal. Some insulation measures do remain funded by the major utilities, who then pass on the price to all householders in higher bills, through a programme called the Energy Company Obligation that is an adjunct to the Green Deal. The companies have been protesting vigorously about the very high cost of this scheme even though the charts above show that remarkably few homes have actually benefited from this expensive requirement or the mainstream Green Deal itself.

What else has gone wrong? Of course the complexity and ambiguities in the Green Deal have limited its appeal. The high interest rate on the financing is also stopping many people from using it. I’ve also suspected that the process of trying to help households by using outside Green Deal assessors was likely to be badly flawed.

To investigate this suspicion, I had a Green Deal assessment carried out on a house which my wife and I plan to live in after it has been rebuilt. Did the report show how we might save cash by carrying out improvements? No, the complex and unreadable documents we received recommended measures which could not possibly save us money. They also contained manifest arithmetic errors and inconsistencies, despite coming from British Gas, probably the largest backer of the Green Deal. [2] To give just one of tens of separate examples, the suggested savings from solid wall insulation are variously said to be £376, £576 or £432 in the nine pages of documentation we received.

Even more seriously than this, the measures specifically recommended for our home do not meet what is called the Green Deal’s ‘Golden Rule’, that the savings from better insulation and microgeneration should be greater than the cost of the loan we would take out to finance the measures. The five top measures recommended by British Gas would cost a minimum of £21,000 and would save an estimated £1,201 a year. (The home needs solid wall insulation and a boiler and we want to have solar panels if possible). At a Green Deal interest rate of 7%, the recommended improvements wouldn’t even cover the annual interest payments, let alone enable us to pay back the capital.

To people with reasonable incomes and well-insulated homes, the impact of fuel poverty is perhaps not recognised as clearly as it might be. As prices rise yet again this autumn, many householders will be forced to turn down the heat again and live in cold and unhealthy homes. A coordinated national effort to improve home insulation must be a priority and the Green Deal is proving an unqualified disaster and a national disgrace. We must go back to cheaper, more targeted, more comprehensible central financing of better insulation.

 

 

 

 

 

 



[2] No criticism of the individual who did the Green Deal assessment is intended. He is obliged to work with software which is badly flawed and out-of-date.