What is the Green Deal?
The Government’s flagship ‘Green Deal’ policy will allow the owners of homes and businesses to improve the energy efficiency of their property at no upfront cost, helping to cut carbon emissions and lower energy bills.
The Green Deal will enable businesses to set up as Green Deal Providers and offer consumers the finance to carry out energy efficiency retrofit work on their property. Repayment for the work will then be covered by the energy bill savings that result. The Energy Act 2011 sets out the financing mechanism and legal framework for the Green Deal. Importantly, this legislation allows the cost of the work to be attached to the building rather than the individual, so when a person moves house they no longer have to make the repayments.
The first work to be carried out under the Green Deal is expected to start in autumn 2012. The FMB is working closely with the Government to make sure the Green Deal can be delivered successfully and can capture the benefits for the economy, consumers and the environment.
More jobs
The Green Deal will be significant for the building industry. The Government expects the scheme to kick start £14bn investment over the next decade and support at least 65,000 new insulation and construction jobs by 2015. However, in order to succeed, the Government must generate business confidence in the scheme by sending clear policy signals.
Creating growth
The FMB believes the Government should go further to create the much needed growth in the energy saving market. Ministers should act on the recommendation from the 'Low Carbon Construction Innovation & Growth Team (IGT)' report and introduce fiscal incentives beyond the Green Deal finance to ensure its success. These incentives could include a reduction in VAT for all domestic energy efficiency installations, Stamp Duty relief or a Council Tax rebate.
Raising standards
The Green Deal will be underpinned by an accreditation framework that will ensure the right measures for each property are installed to the highest standards and consumer protection is given prime importance. Installer standards must be consistently high and rogue traders must be eliminated from the market in order to achieve consumer confidence in the scheme. The ‘Green Deal Quality Mark’ will help consumers identify the best businesses even if the work is not being paid for by Green Deal finance.
Developing skills
Many small construction firms still have work to do to develop the necessary knowledge and skills that will enable them to benefit from low carbon business opportunities such as the Green Deal. The FMB is working with CITB-ConstructionSkills and the National Specialist Contractors Council to lead the Cut the Carbon in Construction campaign, which helps small and medium-sized construction companies understand the changes within the industry. For advice on how to prepare your business for the Green Deal and information about the courses and qualifications already available in this area, visit the Cut the Carbon in Construction website.
Opportunities for SMEs
The potential for the Green Deal to create growth and jobs is extremely welcome, particularly in the context of a fragile economic recovery. Small contractors working locally are the obvious choice for homeowners and landlords looking to make energy efficiency improvements to their property. However, there is a growing concern that small and medium-sized businesses will be excluded from the market by those responsible for arranging Green Deal finance for consumers. Owing to the initial and ongoing costs involved, it is currently expected that the energy companies, major contractors and big retailers will be the most likely to take on the role of the Green Deal Provider. Therefore, it will be extremely difficult for SMEs to access Green Deal finance directly, and without an alternative finance mechanism in place businesses that are not tied to Green Deal Providers will be unable to offer their services. The FMB believes the Government should create a 'special delivery finance vehicle' that will enable accredited Green Deal installers to contract directly with clients interested in a Green Deal package. This would ensure small business have direct access to the Green Deal market.
Recommendations:
In order to make the Green Deal a success, the FMB calls on the Government to:
-
Provide certainty for businesses expected to deliver the Green Deal by placing the policy clearly within an overarching strategy for energy efficiency in line with the UK’s commitment to reduce greenhouse gas emissions by 80% by 2050.
-
Introduce fiscal incentives beyond the Green Deal finance to ensure its success and the much needed growth in the energy saving market.
-
Create a 'special delivery finance vehicle' that will enable accredited Green Deal installers to contract directly with consumers who wish to use Green Deal and/or ECO finance to pay for the work.
-
Support the efforts of SMEs to forge a mutually beneficial relationship with one or more Green Deal Provider.
-
Invest in the development of new skills in the construction sector to support the transition to a low-carbon built environment, and ensure the procurement process is used effectively to promote training and apprenticeships.
