What Went Wrong with the Green Deal?

25 Mar 2014

The Green Deal has been called a failure due to low numbers signing up. Read 6 reasons which explain how and why the Green Deal is under-performing.

The Green Deal was introduced by the coalition government as a measure to improve the UK's housing stock and to reduce the country's carbon emissions. However, the scheme has performed extremely poorly in its first year, and it has received criticism from all sides. So how and why has the Green Deal failed?Man holding bonsai tree plant in hand with clear blue sky in countryside

1. Mixed messages and a complicated process

The overriding criticism of the Green Deal is that it is over-complicated. As part of the deal, homeowners must first pay for a home assessment, then get quotes from three Green Deal providers for a home improvement, which must also be sure to save money on energy bills.The length of the consultation process is too long to attract anybody but the most dedicated Green Deal supporters and there have been many calls from the trade to simplify the process, to make it as easy as possible to sign up.

2. Simple marketing problem

It isn’t immediately clear what the Green Deal involves – hence the number of ‘myth busting’ pages about it online. By using the term ‘energy saving’ it’s not obvious that the Green Deal refers to reductions in gas and electricity bills as well as the environmental benefits.In the UK, we still don’t see reducing energy waste and carbon emissions as our number one priority, and as such the Department for Energy and Climate Change (DECC) hasn’t communicated the Green Deal’s benefits effectively for their target audience.

3. Lack of homeowner enthusiasm harms trade

The Green Deal was supposed to boost the construction and home improvement industries by creating a flurry of installation projects. Barker attributes part of the failure to big companies who have been “slow to act”. However, until now only half the number of approved providers are yet to make a sale - the supply is there but the demand is still low.

4. Trade undercutting the Green Deal

There have been stories circulating in the industry about tradesmen piggybacking consumer enquiries about Green Deal improvements to win their own sales. These ‘hot’ leads are already aware that their property could benefit from improvements, but are often easily dissuaded from taking out Green Deal finance due to its complicated process and the impact a loan has on the resale value of the house.

5. “Financial failure”

Green pound sign (GBP) made from grassIt was revealed recently that the Green Deal costs more to run than it hands out to consumers, with total government expenditure at £44,586 a month in administration costs for each of the 746 homes that completed Green Deal plans (£33.2 million across the first year).The government were quick to point out that this expenditure covered all of their energy saving schemes, including the Energy Company Obligation (ECO) scheme, however there is still a lot of work to be done to prove that they are financially viable.The Green Deal Cashback scheme incentive for homeowners has also been criticised, due to the majority of payouts going to reimburse new boilers, which do little to improve the overall energy rating of a house compared to measures like wall and loft insulation.

6. Other bad press and “scandals”

As well as general criticism for a slow start and ‘teething problems’, the Green Deal’s reputation has been damaged further after the Green Deal Finance Company (GDFC) were cautioned by the Advertising Standards Authority (ASA) for wrongly claiming that their loans were the cheapest on the market. Although the GDFC is a private company, it has received government backing and a £244m loan fund for the scheme and, as such, the Green Deal has been lambasted for being involved in mis-selling.Despite the poor performance of the Green Deal so far, the response of the government has been unwaveringly optimistic. By all accounts, they determined to make this scheme work. But how are they going to make the Green Deal a success?Find out what the government are planning in our blog about the future of the green deal.