The Green Deal facts for kids

The Green Deal was a special plan from the UK government between 2012 and 2015. It helped people living in homes pay for improvements that would save energy. Think of things like better insulation or new heating systems. The main idea was that the money saved on energy bills would be more than the cost of the work. This was called the 'Golden Rule'. If this rule was met, people could get energy-saving upgrades without paying a lot of money upfront. They would then pay back the cost using the money they saved on their energy bills.

There were about 45 different types of home improvements you could get through the Green Deal. These included simple things like insulating your loft or walls, or more advanced systems like solar water heaters and modern boilers.

This plan had a unique way of handling payments. The cost of the improvements stayed with the house itself, not with the person who owned or rented it. This meant that if new people moved in, they would become responsible for the payments. This needed new laws in England to make it work.

The government hoped the Green Deal would help millions of homes in the UK become more energy efficient. They wanted to see things like double glazing, better insulation, and heat pumps installed. However, only 1,754 households actually signed up for the main part of the plan. Because not many people joined, the government stopped the scheme to save taxpayer money.

How the Green Deal Started

The Green Deal officially began in January 2013, after a quiet start in October 2012. It was launched by the Department of Energy and Climate Change. This allowed homes in Great Britain to start getting energy-saving improvements. The first Green Deal Plans were available from January 28, 2013.

In the first six months, over 38,000 homes had energy assessments. But only four Green Deal plans were actually taken out. This showed that not many people were signing up.

The loans for the Green Deal were repaid at a fixed rate of about 6.92% for up to 25 years. This was often seen as quite high compared to other home loans. Many people didn't even know about the Green Deal, and those who did often criticized its high interest rates.

Because so few people used the Green Deal, some companies that installed energy-saving measures struggled. One company even had to close down and let go of 600 staff.

In 2014, a different version of the Green Deal was launched. This time, it offered grants (money you don't pay back) instead of loans. This new plan, called the Green Deal Home Improvement Fund (GDHIF), offered households in England and Wales up to £7,600 for making their homes more energy efficient. It started in June 2014.

The Green Deal was part of a law called the Energy Act 2011. In April 2012, the government announced a list of companies that planned to offer Green Deal services. These included some big energy companies and even a well-known store called B&Q.

In July 2015, the government decided to stop the Green Deal. The Energy Secretary, Amber Rudd, said the decision was made to protect taxpayers. She mentioned that not enough people were using the scheme and there were worries about how well it was being run.

A group of politicians called the Energy and Climate Change Committee said the Green Deal "failed to live up to expectations." They felt it caused "frustration and confusion" for both people and businesses. While there wasn't much disagreement about stopping the scheme, some people worried that there was no new plan to replace it. In total, about 15,000 Green Deals were issued before it ended.

How the Green Deal Worked

The idea was that homeowners could make their homes more energy efficient without paying all the costs right away.

• First, a government-approved expert would visit the home. They would check what improvements could be made and how much money they might save on energy bills.
• Second, the homeowner would pick a company to do the work. Only work that would save energy, as suggested by the expert, would qualify.
• Third, a Green Deal plan was signed. This was a contract between the homeowner and the company. It explained the work and its cost. A special company called The Green Deal Finance Company (GDFC) provided the money for these improvements.
• Finally, after the work was done, the homeowner or tenant would pay back the cost. These payments were added to their electricity bill.

A company called Gemserv helped manage the Green Deal. They kept lists of approved installers and assessors. They also worked to make sure people were protected and understood the scheme.

Types of Improvements Covered

Here are some of the energy-saving improvements you could get through the Green Deal:

Heating and Cooling

• Modern boilers
• Controls for heating systems
• Heat pumps (which move heat into or out of your home)

Building Structure

• Cavity wall insulation (filling gaps in walls)
• Loft insulation
• Insulation for floors and flat roofs
• Stopping draughts (cold air leaks)

Lighting

• Energy-efficient light fittings and controls

Water Heating

• New hot water systems
• Water-saving taps and showers

Windows and Doors

• Energy-efficient windows and doors

Why People Criticized the Green Deal

Many groups, like Consumer Focus and Friends of the Earth, criticized the Green Deal.

• Some worried it might make fuel poverty worse. This is when people can't afford to heat their homes properly.
• Others were concerned about the loans. They feared these loans might become risky, similar to what happened in the 2008 financial crisis with housing loans.
• Businesses in the building industry felt there wasn't enough encouragement for people to use the Green Deal.
• There were also worries about how well consumers would be protected and if there was enough competition among companies offering the services.

The government even put aside £200 million to encourage people to sign up early. Some politicians also worried that the scheme could cost families a lot of money.

A big concern was whether the "Golden Rule" (that savings would always be more than costs) would actually work. Critics also said the Green Deal might only help wealthier people, not those who needed it most. The Citizens Advice Bureau worried about a lack of protection for people, especially those who moved into a home with an existing Green Deal payment.

The quality of the energy assessments was also questioned. Some felt that the training for assessors was too short, and they relied too much on computer programs instead of their own knowledge.

Even the Prime Minister at the time, David Cameron, defended the Green Deal. He said it was meant to grow slowly, not with a big rush. However, the government did spend a lot to try and get people to sign up early.

There were also problems with con artists pretending to be Green Deal assessors. They would charge people fees for fake assessments.

High Interest Rate

The 7% interest rate for the Green Deal loans was heavily criticized. It was higher than many other home loans available at the time. Even though it was a fixed rate for up to 25 years, people compared it to shorter-term, lower-interest loans. Some Green Deal providers themselves worried that the high rates would make the scheme fail. This high rate also made people doubt if the "Golden Rule" could truly be met.

Experts suggested that to attract investors, the Green Deal might need to change, which could go against its original goals.

Worries About Selling Homes

People also worried about how having a Green Deal loan attached to a property would affect its value or how easy it would be to sell or get a new mortgage for it.

If the energy savings didn't happen as promised, or if the loan was too expensive, it could make a house harder to sell. Government advice stated that if you moved into a home with a Green Deal, the seller or landlord had to show you an Energy Performance Certificate. This document would explain the improvements and how much you'd need to pay back. The person paying the electricity bill would pay the costs, because they would benefit from lower energy bills.

Risk of Overheating

Some studies suggested that homes with Green Deal improvements might actually get too hot, especially in warmer weather. This was a concern because the focus was on insulating homes to keep them warm in winter. But with more heatwaves predicted for the UK, there was a risk that well-insulated homes could trap too much heat, especially for older people or those living in city flats.

Assessment Quality

Research also raised concerns about how reliable the Green Deal energy assessments were. This was important because the loan repayments were based on these predicted energy savings. There were questions about how consistent these assessments were and if they were the best way to figure out loan amounts.

Energy Company Obligation (ECO)

The Department of Energy and Climate Change also wanted energy companies to make improvements to some homes without the homeowner paying upfront.

This plan, called the Energy Company Obligation (ECO), was paid for by big energy suppliers. Its goal was to make homes more energy efficient and lower energy bills in the UK.

ECO was designed to help people in vulnerable homes or those that were harder to improve. Energy suppliers spent about £1.3 billion each year on this, and this cost was added to everyone's energy bills.

If the cost of the work was more than the savings, or if people needed financial help, energy suppliers could provide extra money. ECO replaced older schemes like CERT and Warm Front.

The Green Deal Home Improvement Fund

The Green Deal Home Improvement Fund (GDHIF) was a new way to encourage homeowners in England and Wales to make their homes more energy efficient.

This scheme offered householders money for making improvements. You could choose one or two main offers and potentially claim up to £7,600 in total. This part of the policy stopped taking new applications on July 24, 2014, because it was so popular.

Offer 1 You could get up to £1,000 for installing two energy-saving improvements from a list of 12. Some examples included:

• Modern gas boilers
• Cavity wall insulation
• Loft insulation
• Double glazing (replacing single windows)

Offer 2 You could get up to 75% of the cost (up to £6,000) for installing solid wall insulation, which is a big energy saver.

Offer 3 Householders could also get up to £100 back for the cost of their Green Deal Assessment Report (GDAR) if it was less than 24 months old when they did the work.

Offer 4 An extra bonus of up to £500 was available for people who had bought a home in the last 12 months before applying.

What you needed to do:

• You had to apply for the money (voucher) before the work started.
• The improvements had to be recommended in an Energy Performance Certificate (EPC) or GDAR from the last 24 months.
• You couldn't get this money if you were already getting other government funding for the same improvements.

This scheme closed quickly because so many people wanted to use it. However, in October 2014, the government announced that another £100 million would be available for a second phase of the GDHIF.

The Green Deal Finance Company

The Green Deal Finance Company (TGDFC) was a large group of over 50 companies and organizations. It was created in March 2012 to help provide the money for Green Deal loans. It aimed to make sure that all approved Green Deal providers could get funding easily and fairly. By working at a national level, it tried to keep the costs of Green Deals low and get the cheapest money available. It worked closely with the government and other banks to support the Green Deal market.

See Also

• CRC Energy Efficiency Scheme
• Climate Change Agreement
• Capital allowance
• Energy policy of the United Kingdom
• Energy use and conservation in the United Kingdom
• Renewable Heat Incentive
• Renewables Obligation
• United Kingdom Climate Change Programme
• Feed-in tariffs in the United Kingdom
• Energy Company Obligation