Minister outlines Green Deal details

Councils will be expected to take “strategic ownership” of the national roll-out of the government’s flagship energy efficiency programme, the climate change minister Greg Barker has said.

Speaking ahead of the publication of the Energy Security and Green Economy Bill next month, Mr Barker said that local authorities will be expected to work in partnership with the private sector in delivering the Green Deal and will be asked to draw up plans of their areas to help roll out the scheme.

The Green Deal promises to provide energy efficiency improvements of around £6,500 per home – for example the installation of better lagging – with the upfront cost met by the energy companies or high street suppliers such as Marks & Spencer and B&Q, which will then be paid back through the savings accrued through lower energy bills.

Ministers have said they expect the scheme to create tens of thousands of jobs in the energy efficiency and refurbishment sector.

However, the “golden rule” of the Green Deal is that the repayments will not exceed the savings, so that households will always reduce energy bills, Mr Barker insisted. “Everybody who has the Green Deal should see a cut in their energy bill,” he said. “So it’s not just a climate change issue, a quality of life issue and a jobs issue. In these tough times, more importantly, it’s a money saving issue.”

Mr Barker confirmed for the first time that small and medium enterprises will have access to the Green Deal, particularly those that fall outside the CRC Energy Efficiency scheme.

The “core model” of the Green Deal for business will be similar to that for housing, but including some differences in the types of energy efficiency measures that are eligible. There are no plans to cap the amount of investment per business as with homes.

The 2008 English House Condition Survey, the most recent year for which figures are available, found that 21% (or 670,000 homes) of the 3.2 million dwellings in the private rented sector were among the worst-performing properties, with ratings of either F or G – the lowest band of energy efficiency.

Mr Barker acknowledged that for many poorly maintained private rental homes, the £6,500 cap on investment – which he said at this stage was not policy but a “guide” – would not go far enough to improve the energy efficiency of such “hard-to-treat” buildings.

Mr Barker said the government would therefore reform the energy supplier obligation, with £1bn set aside each year from 2013 to ensure that those homes needing work over and above £6,500 got the necessary refurbishment.

Council role

Mr Barker added that the new Energy Company Obligation (ECO) would also subsidise those in fuel poverty, who may not achieve enough savings on energy bills for his golden rule to apply.

Mr Barker also said local authorities would have “a key role” to play in ensuring that the ECO was “effectively spent”. This would involve a “new model” of engagement with the private sector, with councils selecting a few preferred partners, who would deliver the Green Deal in their area according to street-by-street plans drawn up by councils “prioritising the most vulnerable and the low-quality housing in their area”. Councils could also be providers of the Green Deal themselves, he added.

Mr Barker revealed he was working with the Department for Communities & Local Government to create a mechanism through which councils could be paid to act as strategic partners to the private sector. He said although the details had not been worked out, the payment could take the form of a commission paid by the private sector “in lieu of advertising or marketing that they don’t have to spend”.

“[If a company] links up with a local authority you’re almost guaranteed customers, and clearly that has a very real value,” he added.

“We see local authorities having strategic ownership of the roll-out of the Green Deal in their area, but recognise that that is likely to incur a cost. We think that by operating in partnership – a local partnership that councils design themselves that is right for their particular area – there should be the potential for them to be rewarded to do that,” he said.

Enforcement

The minister also confirmed that local authorities will be handed an enforcement role with the power to issue £5,000 fines to “recalcitrant landlords” who do not accept “reasonable requests” from their tenants to improve the energy efficiency of their homes.

He said this power, to be laid out in the bill, was likely to apply to properties rated F and G, but would be delayed until 2015 “to give landlords time to make voluntary improvements first”.

“We think that will give a very clear signal about our intent and we think that will drive change in the private rented sector. There are landlords in the private sector that will need that extra prod,” he said.

Mr Barker will host a round table with local authorities in January to set out their role in more detail. “It’s absolutely essential that we have a good working relationship with councils, who are key to the delivery.”