Green deal consultation: SMEs Face Green Deal squeeze

25 November 2011

Brian Berry, FMB Director of External Affairs laments the lack of opportunity for small firms

The long awaited Green Deal consultation paper has finally arrived but small and medium sized enterprise (SME) contractors will have reason to be concerned that the Green Deal might not be the golden opportunity for new retrofit work. The Government is proposing that the Green Deal contract will be between the Green Deal Provider and the householder so unless a SME contactor is either willing to become a Green Deal Provider or subcontract to a Green Deal Provider they will effectively be excluded from the Green Deal. The problem is that smaller firms often do have the same access to capital market funding as large firms, due to lacking the same funding trading record or back-office capabilities, and will therefore be unable to become a Green Deal Provider.

This is a great shame as the Green Deal offers an enormous opportunity to transform the nation’s building stock to make it greener and more energy efficient. It also has the potential to generate thousands of new jobs in the building industry although it is interesting to note that the 65,000 figure now being quoted is lower than the 100,000 figure mentioned before the consultation!  The Government has said it recognises that SME builders are in direct contact with householders and therefore well placed to advise householders on specific works that might be appropriate under the Green Deal but doesn’t explain how they will obtain Green Deal money other than tying themselves to major companies who have set themselves up as Green Deal Providers. There is therefore a very real danger that the large energy and utility companies will simply hoover up the Green Deal market and squeeze out local builders which is very bad news not only for the building industry and local economies but also for customer choice.

The Government must be persuaded as a matter of urgency that accredited Green Deal installers should have equal access to Green Deal finance so that they can offer these new finance packages to their customers. It is after all the local builder who is best placed to advise customers on retrofit work when they are carrying out other home improvement works. These ‘trigger points’ for Green Deal work will simply be lost if local builders can’t access the Green Deal finance.

The solution to this problem must be for the Government to create a Green Deal finance delivery vehicle that accredited builders can access and offer to customers wanting to undertake Green Deal work. With rising energy prices the market for retrofit work is certainly there and is worth at least £3.5 billion every year but consumers will need to be convinced that the Green Deal makes financial sense to them. It’s pleasing therefore to see the proposed £150 cash back incentive in the consultation but it’s not enough. Nor is it clear how the £200 million incentive announced by the Chief Secretary to the Treasury, Danny Alexander MP, will be delivered.  Incentives are certainly needed to kick start the Green Deal but a reduced rate of VAT for Green Deal approved measures would be the best incentive to help boost demand and create much needed jobs in the building industry. First though local building companies need to be given the opportunity access the Green Deal work otherwise the Green Deal will quite literally be a no deal for local builders.


This seems to be the same old story where the SME Contractors are being left out in the cold when the industry is on its knees with lack of work.

Alex Murray, 25 November 2011

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