The Green Deal - Great Concept / Corrupt Implementation

The Green Deal is a typical good idea turned into a costly piece of legislation that takes money from the poor and gives it to everyone in the supply chain.

There has been lots of noise in the UK about the ECO contribution in domestic energy bills and as a result, that will be reduced by around £50 per household next year, but that still leaves 4-5% of each bill going into this bucket - and what does it get spent on?

I had assessments on several of my houses last year and one, to use as an example, was by the NLA (National Landlords Association). A typical pre-war terrace with rear extension, double glazing and old gas central heating. To improve energy efficiency, cavity insulation on the main house, external wall insulation on the extension and on the flat roof of the extension plus a new boiler and more modern controls would have been worth considering and the assessment reflected that. There is an issue in that the Green Deal is covered by the consumer credit act which applies to an individual so it cannot be used in a landlord/tenant situation where the landlords house gets the benefits and the tenant pays for it in his/her energy bills but that is likely to be rectified by Parliament in the new year. This situation does not apply to the house in question as I offer it ‘fully inclusive’ and as such, am the landlord and pay all of the bills.

I chased the NLA to point this out and they got back to me and stated they could do all of the works for £8,433.39p.  I commented that that was a surprisingly accurate estimate from someone who only had the Green Deal EPC and Occupancy Assessment to work from and who had never seen the house. I also commented that I believed I could get the work done for less than £5,000. She then asked if I had any tenants on benefits as if so, they would qualify for ECO funding and the works would get done free of charge.  I do not so then she said she’d be back in touch after the consumer credit issue was resolved. I re-iterated that this was not an issue in this case at which point she admitted that the NLA did not have a solution in place yet other than for ECO customers….

So this is the scam that the industry has cooked up, bamboozling a well intentioned but incompetent government department in the process:

-          5-8% is added to every domestic energy bill in the country. This takes between £50 and £200 from families, the vast majority of whom can barely afford it

-          I don’t even want to speculate how large a pot of money this creates (but it runs to hundreds of millions of pounds)

-          This gets focussed on ECO customers, so a landlord who has the money to buy a house who happens to have tenants on benefits, gets a free boiler. Why? If the house needs a new boiler the landlord should buy one – maintaining houses costs money, even HMRC notices that and allows 10% against rent to cover it.

-          The industry focusses on ECO because no one asks questions:

o   The landlord gets a new boiler (and all the rest) free of charge

o   The plumber gets paid for an expensive installation (£8,433 for less than £5,000 of work in my example and that is at retail prices)

o   The boiler manufacturer gets to peddle lots of new kit and charges for 2 or 5 or even 7 year warranties as part of the deal

o   The DECC (Department of Energy and Climate Change) get to claim they have improved the country’s housing stock and reduced energy usage by spending xxx million pounds

o   And everyone can overcharge as long as it meets the Golden Rule – so you work out what the maximum savings could be, that determines the maximum cost, which becomes the estimate (£8,433 in my case), all the contractor has to do is ‘some stuff that costs less than that’…

My NLA example is just one element of the chain, I have had plumbers tell me they can get me a free new boiler (if I have benefits tenants), there just has to be something wrong with the existing one and they have never found one that did not have something  wrong yet (and have a hammer to ensure this is true on the few examples that are in perfect working order….).  

And there are many other examples of the corruption of the system here – all of the ‘free’ wall insulation (that probably achieves nothing given the break neck speed it is installed and the way in which any difficult bit (which tend to be the highest and most wind exposed) get left and also, how it never seems to work in the corners so you get those natural cold spots where the tenants complain about damp and mould when it is actually condensation), the ‘free’ loft insulation which gets laid badly or worse, over boards.

It is time this gravy train was stopped. No more subsidies for energy saving measures, if they are worth having people will pay for them. No more hype about energy efficient boilers or insulation in old houses – when you look at the whole picture, most of these investments are worse than carbon neutral.