Saturday, 16 March 2013

Ed Davey defends green deal interest rates

Ed Davey, the energy and climate change secretary, defended the government's green deal loan scheme on Tuesday, saying the interest rates of around 7% for householders to undertake energy efficiency works are not excessive.

The flagship scheme, launched in January, allows householders to repay long-term loans for installing up to 40 different energy saving technologies via their electricity bills. But it was widely criticised at its launch for failing to provide enough incentives for the householder and for being overly complex.

"I would not expect many people to apply for finance yet. It's a bit too early," said Davey. "I won't concede that loan costs are too high. You have to compare it with unsecured loan and not mortgages. This is a great deal," he told delegates at Ecobuild, a sustainable building show in London.

"We are not trying to pretend that we have everything right. There will be issues to address. We will be responsive to get rid of the niggles," he said.

Davey fuelled rumours that the scheme had been poorly taken up by the public, citing "legal reasons" for not disclosing how many households had so far asked for assessments on the energy efficiency of their homes or the number of people who had applied for loans.

"Our plan is to issue monthly reports starting this spring," he said.

Eight million homes need solid wall insulation, 6m could get more loft insulation."

"The relative cost of the loans is higher than most mortgages. People are challenged by the numbers. It adds fuel to their fears of taking up more debt. More credit checks are occurring. You can understand, but there's the creeping [idea] that this will make it harder for some householders to access finance. There is more room to be flexible and to bring costs down," he said.

The industry was divided on the initial take up. "It is delivering. Based on the feedback we have had, it has changed the nature of the conversation about energy efficiency," said Paul King, chief executive of the Green Building Council. "There is a very live discussion about the creation of a new industry with the potential of 26 million customers in the UK. It is possible to see an explosion of interest in a few years' time."

However, some small companies said they feared that green deal would undermine their businesses.

Stephen Bull, who runs a plumbing and heating firm with 2,000 customers in London, said that the green deal scheme was complex, expensive for small builders to take part in, and could undermine his business.

"We want to make sure we don't get left behind and I want to become an installer. But it seems to be a very much a top-down approach, set up by big business for big business. It seems only suitable for them. We could actually lose our clients to big multinational companies.

"In principle the idea is good and I want it to work. But even if I become a green deal installer, I would not necessarily get the work from my existing clients. I am struggling to understand it.full article

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