NAO slams ‘£94 a tonne’ Green Deal as ineffective and wasteful

A report by the National Audit Office has branded the government’s Green Deal a waste of money.

Launched in 2013 by the coalition government, the Green Deal was touted as a “revolution” in upgrading Britain’s old buildings and sought to retrofit buildings with eco-friendly technology, and was expected to target the residential sector but also cover non-residential stock. However, the scheme failed to gain traction and was scrapped in July 2015.

The report by the NAO found that in total the scheme has cost taxpayers £240m and cost £17,000 for each home that was improved. The NAO concluded that “the Green Deal has not therefore been value for money”.

Under the scheme headed by the Department of Energy & Climate Change (DECC), householders were encouraged to take out loans to pay for measures such as insulation or double-glazing. But only 14,000 households took up the offer, well below expectations.

But the NAO said DECC did not test it with consumers beforehand and the scheme saved “negligible” amounts of carbon dioxide emissions.

In addition, the NAO says that DECC’s design of its Energy Company Obliogation (ECO) scheme to support the Green Deal added to energy companies’ costs of meeting their ECO obligations and reduced the value for money available. However, DECC’s data is not detailed enough to conclude by how much.

The report found that while DECC achieved its target to improve a million homes with the ECO and Green Deal schemes, this is not a direct indicator of progress against the objective of reducing CO2 emissions. This is because different types of energy-efficiency measures save different amounts of CO2.

The schemes saved substantially less CO2 than previous supplier obligations, mainly because of the initial focus on “harder-to-treat” homes, as its analysis showed that previous schemes had absorbed demand for cheaper measures.

As a result, the overall cost per tonne of carbon saved by both schemes was £94, whereas the previous set of schemes delivered the same saving for £34. 

The UK Green Building Council, which was instrumental in launching the Greeen Deal in the first place, said that the programme had failed due to being mismanaged and offering poor value to anyone borrowing via the Green Deal Finance Company.  

Richard Twinn, policy adviser at the UK Green Building Council, said: “The Green Deal was a pioneering attempt to bring private finance into the home retrofit market, but poor management ultimately set it up to fail. High interest rates limited the amount that could be borrowed under the scheme, and a lack of long-term incentives meant there was insufficient demand from householders. This was compounded by constant policy changes which made it very difficult for the industry to invest.”

Twinn called on the government to set out a long-term vision for improving the housing stock and then work with the industry to develop a suite of policies which provide a compelling offer to every household.