Summary and implications

As we come towards the end of a particularly cold winter, work continues on the development and promotion of the energy efficiency initiatives that form the Coalition's Green Deal proposals.  

We previously reported in 2010 that the plans aim to encourage homeowners to carry out energy-saving improvements on their properties without any upfront costs (which are instead recouped later through their fuel bills). Work on the practical implementation of these proposals began in earnest last autumn following their unveiling by the Deputy Prime Minister and the beginning of 2011 has seen further developments:  

  • The Energy Bill, which attempts to codify the principles of the Green Deal in legislation, has now passed the initial reading and committee stages in the House of Lords;
  • Reaction to the Green Deal proposals has been building, with the UK Green Building Council issuing particularly stern advice regarding their likelihood of success; and  
  • Discussions regarding the Green Deal plans have extended to considering their application to new build as well as existing properties.

Parliamentary progress of the Energy Bill

As outlined in our December 2010 Update, the Energy Bill was introduced into the House of Lords on 8 December 2010. Since that first reading, the Lords have extensively scrutinised its wording during a detailed secondary reading and several committee sessions, in which the following notable issues were raised:

Implementation mechanics

While the Bill's general principles were largely well-received by the Lords, (including those in Opposition), many felt that it lacked detail about exactly how its provisions will be implemented in practice. For example, questions were raised regarding how the energy efficiency of affected properties will be assessed, who will carry out the assessments and who will pay for them. Enquiries were similarly made as to how potential problems such as sub-standard improvement works or consumer default on home improvement loans will be dealt with, as well as how the Bill's UK-wide provisions will interact with national energy efficiency policies, (particularly those in Scotland and Wales).

Consumer protection

A key concern raised by the Lords addressed how the Bill will protect consumers, who “are intended to be the chief beneficiaries and bear the costs and liabilities for repaying Green Deal investments”, in the event of any problems. As well as questioning how consumers will be protected should they fall victim to substandard building works, the Lords also discussed the need for more detail regarding how consumers will pay back the loans and be protected from extortionately raised interest rates, and how repayments will be dealt with if a householder sells their property.

Application to the private rented sector

Another major concern of the Lords was precisely how the Bill will apply to rental properties. Here, questions raised included how to encourage private landlords to implement the Bill's provisions (and whether they will need to be obliged to do so), and how to protect tenants, for example if their landlords refuse to adhere to the Bill's requirements or unreasonably pass on costs.


Practical enhancement of energy security

In line with the aims of the Green Deal, the Lords questioned whether the Bill goes far enough in stipulating measures designed to enhance energy security. In particular, many commented on the need to promote
the use of renewable and low carbon energy sources much more explicitly. This in turn raised questions over which type of alternative energy sources should be endorsed (with particularly heated debate surrounding the issue of nuclear energy).

The Lords were scheduled to report on the outcome of their review on 2 March 2011. They will then hold a final reading of the Bill before it passes through to the House of Commons for further consideration.

UK Green Building Council's reaction to the Bill

On 27 January 2011, the UK Green Building Council (UKGBC) laid down the gauntlet to the Coalition as regards the successful implementation of the Green Deal proposals. While supportive of the overall policy, UKGBC issued three key tests which, in its view, will need to be satisfied if the programme is to work in real terms.

The tests are as follows:

To view table click here

Extending the Green Deal to new build properties

While work continues on the legislation that will implement the Green Deal, secondary debates have already begun regarding whether the scope of the scheme can and should be widened to include new build residential properties as well as existing homes. In a conference speech earlier this month, the Housing Minister, Grant Shapps, proposed extending the remit of the programme to allow developers building zero carbon standard homes to benefit from the energy-saving home improvement loans. In such instances, the proposed £6,500 loan could be used to offset the inevitably higher costs of building energy efficient properties and would be subsequently paid back by future occupiers through the savings made on fuel. Questions have since been raised, however, over how viable the Green Deal plans actually are in relation to new build homes. In particular, commentators have doubts over how fuel savings can be measured in completely new and unused properties which are already purposely built to a zero-carbon standard.