Where next for the green deal?
As the government ponders its response to the green deal consultation, Bill Hull, from law firm TLT, examines the key areas of interest for registered providers
The latest government consultation on the green deal and energy company obligation schemes closed on 18 January.
Collectively, these two schemes represent the government’s flagship initiative for improving the energy efficiency of the UK’s existing housing stock and is of great interest to those in the housing sector. There is a large amount of detail to digest about the schemes and this article aims to identify a few of the particular issues that have been highlighted in the many responses to the consultation by the social housing community. It will also anticipate the government’s response.
Availability of ECO support
There are two strands to the proposed ECO scheme which will replace the existing CERT and CESP schemes. One part is the ECO carbon saving obligation which will focus on solid wall insulation. The other element is the affordable warmth obligation. At first glance, as the specific purpose of this obligation is to target funding towards low income households, RPs may assume that many of their tenants would qualify for support under the scheme. However, the government’s current proposal is to exclude social housing tenants from the affordable warmth scheme.
A key barrier to the uptake of the green deal is likely to be the objection by tenants that the installation of efficiency measures should be the responsibility of the RP and not the tenant. If affordable warmth funding were to be denied to the social housing sector, the government would be reinforcing this objection. This would create extra challenges for RPs in persuading their tenants to participate in the green deal. This would especially occur in instances where there is a funding gap between the cost of a package of measures and finance available under a green deal plan. In light of this, and the chorus of concerns raised during the consultation process about the inequity of the government’s proposals it is hoped that some changes will come through in the final legislation for ECO.
RPs as green deal providers
Many RPs would in principle be interested in participating in the green deal scheme as a provider. This would make an RP responsible for financing and arranging energy efficiency measures for tenants, either individually or as part of a consortium.
Under current proposals, a green deal provider would have to get to grips with some complex documentation and related responsibilities. This includes:
- the documentation associated with its arrangements with accredited green deal advisors and installers;
- the industry wide ‘green deal arrangements agreement’ with energy suppliers who will be collecting payments from customers and;
- the customer facing documentation for each ‘green deal plan’ itself.
In light of this it is hoped that the government will take account of suggestions made during the recent consultation process to facilitate the involvement of a wide range of organisations in the scheme, including RPs, by taking steps such as the production of template documents for use with customers and others and of user friendly guides to documents like the green deal arrangements agreement.
RPs will welcome the proposal that their consent has to be given in order for green deal measures to be installed by a tenant. The risk otherwise is that measures might be installed on ad hoc basis with potentially serious consequences in terms of interference in planned works and other management difficulties.
Less welcome will be the proposal that the consent of all tenants in a block of flats will be required before any green deal measures, such as cavity or solid wall insulation, are installed in the building. Where there is strong demand from the RP and a majority of tenants for measures to be installed, RPs may have to find creative ways of securing the consent of the reluctant minority. This might include tenant engagement programmes designed to raise awareness of the benefits of the measures or possibly even some cash incentives in order to secure participation.
It is expected that the government will not depart from its position on the fundamental requirement for all affected tenants to give their consent to particular green deal measures. However, it is hoped that proposed incentive payments designed to kick-start the uptake of green deal plans will be available to the social housing sector and drive tenant participation in communal improvement schemes.
It is clear that a great deal of time and effort has been already been invested by the government in designing the green deal and ECO schemes and there is a strong sense that the government does wish to see a widespread take-up of green deal plans, including amongst those in the social housing sector. Those interested in making the most of the opportunities offered by the schemes should pay close attention over the coming months as the government publishes responses to the recent consultation exercise and confirms how some of these issues will be addressed.
For more information please contact Bill Hull on 0117 917 7808. Bill is a Partner at TLT. He has advised on government led energy efficiency programmes for 15 years and is a regular speaker and contributor to the policy debate on green deal. Visit www.TLTsolicitors.com.