DECC urged to cut red tape to make Green Deal viable
Two of the UK’s largest housing associations delivered a damning indictment of the Green Deal this week claiming it had been hijacked by red tape making it costly and financially unviable for social landlords.
Places for People and Affinity Sutton were giving evidence to the Commission of Inquiry for the All-Party Parliamentary Group for Excellence in the Built Environment, which is looking into sustainability and the Green Deal.
"The last two years has been about adding more and more bureaucracy, more and more regulation, which has meant that a financing package struggling to stack up in the first place just didn't stack up."
Nicholas Doyle, Places for People
Nicholas Doyle, project director at Places for People, which manages 143,000 properties, including 62,000 housing association homes, said the organisation had been highly committed to the Green Deal and had hoped to become a provider not just for its own tenants but more widely. But it had been forced to abandon the idea. “We are not engaged whatsoever with Green Deal at this point. What I think was lost very early on was an understanding that the GD is a finance package. Everything else is secondary to that.
“The last two years has been about adding more and more bureaucracy, more and more regulation, which has meant that a financing package that was struggling to stack up in the first place – there’s not much fat in capitalising energy saving – just did not stack up.
Doyle continued: “DECC and others lost sight of who was going to pay, and lost sight of the end goal which was that we wanted to generate capital investment for housing.
“For us, we still see Green Deal as a huge opportunity for the sector, but just not now.”
He added: “At the moment, what we have is an overly complicated, overly costly approach... Talk to us again in a couple of years’ time, when energy bills will have gone up significantly and the value of those energy savings have gone up, then we might be able to afford all these things... Not for at least two years, I would suggest.”
Echoing his comments, Jeremy Kape, director of property at Affinity Sutton, which manages 49,000 housing association properties, said: “The Green Deal deals with the long hanging fruit, and in social housing we’ve kind of already picked that off.”
Kape said that the way energy savings were being assessed was also wrong for the sector in that the SAP model predicts energy use based on size of accommodation. However, most people in social housing were underheating their homes and using less energy in the first place, so the savings to the bills might not be as much. “We definitely think that the consumer protection with the Golden Rule is over-played,” said Kape.
"We are long-term investors, and we have tenants on lifetime tenancy agreements. All the Green Deal has done is layer a load of complication over that, for no value."
Jeremy Kape, Affinity Sutton
The criticism comes as figures showed that the installations of cavity wall insulation have collapsed under the Green Deal, falling 97% in April compared to last year. Figures collected by the Cavity Insulation Guarantee Agency, which monitors installations and guarantees issued, seen by Building magazine, show only 1,138 installations were completed last month, down from 49,650 in April 2012.
Also giving evidence to the commission, Pippa Read, policy leader, sustainable environments, from the National Housing Federation, underlined Kape’s point that much of the easy wins on energy efficiency had been carried out through the Decent Homes programme. “So that means it may not be appropriate for low income groups to take a Green Deal charge at present.”
She said many housing associations were pursuing ECO rather than Green Deal, for a number of reasons. “It needs individual consent from every bill payer; obviously, if you’re doing works to a big tenanted block, that may cause some difficulty if you have certain members who don’t want to engage. We feel the GD is overly bureaucratic, which adds to cost and makes it less viable in some cases.”
She added that the sector would like to work with the government to overcome the challenges. Asked by APPG member Andrew Stunell, who was involved in drawing up the Green Deal as a junior minister in DCLG, what the government could do now to make it work, Doyle said: “We can sit and hope energy prices go up, which many think they will; or we can go back and realise we’re not delivering the amount of investment we’d hoped and actually cost every one of the accreditation/training measures and ask what value they’re going to create for the Green Deal. And then start to take them out.
“Consumer protection has dominated the whole thinking over the Green Deal and it’s very important that we have robust consumer protection. But focus should be on what we do when it goes wrong – because whatever we do, there will be mis-selling of it.”
Kape added: “I think you also need to look at social housing and understand what it’s about: we’re a very heavily regulated sector already. And we are long-term investors, and we have tenants who live with us on lifetime tenancy agreements. All the Green Deal has done is layer a load of complication over that, for no value.”