MPs urge Government to revive failing Green Deal energy efficiency scheme

15 September 2014

New incentives to encourage energy efficiency should now be considered by the Government as its ‘Green Deal’ pay-as-you-save scheme has failed to drive the scale of energy saving home improvements needed to cut carbon emissions and insulate consumers from high energy bills – the Energy and Climate Change Committee conclude in a report published today.

Tim Yeo MP, Chair of the Energy & Climate Change Select Committee said:

"Stamp duty discounts and variable council tax rates could be used to broaden the appeal of energy efficiency improvements and make them even more of a money saver for households. Extra incentives certainly need to be considered, as the Government’s flagship pay-as-you-save finance scheme, the Green Deal, has only delivered a fraction of the expected benefits so far."

A combination of financial, communication and behavioural barriers has meant that the Green Deal has been slow to attract customers. Green Deal finance is, in principle, an attractive proposition, but the high interest rates attached to the loan, were putting off potential customers as many households are able to find cheaper finance mechanisms elsewhere. DECC’s communication strategy has been confusing and has often conflated different energy efficiency schemes. As a result, the Government has struggled to drum up support even amongst those households that could benefit most from a Green Deal loan.

Tim Yeo added

"The interest rates attached to the Green Deal are simply not financially attractive enough for many households to go to the hassle of setting one up. By its nature this kind of scheme also only appeals to a certain section of the population who are in a position to take out loans on home improvements. Broader incentives could encourage lots more households to take simpler and cheaper steps to improve the energy efficiency of their properties and save money on their energy bills. Insulating our homes to make them warmer will bring benefits both for homeowners and for society, as we enhance our energy security and lower our carbon emissions."

The MPs are supportive of the principle of the Green Deal but believe the Government needs to set out a clear strategy to revive the scheme and make it both clearer and more appealing to UK households. Alternative financial incentives, and other measures and regulations, should now be considered in tandem with the Green Deal to encourage energy efficiency across wider sections of society.


The Green Deal is the Government’s flagship initiative and has been cited as one of the main ways in which the Government is helping households to tackle rising energy bills. Launched in 2013, it is a market-led framework that is intended to allow individuals and businesses to make energy efficiency improvements to their buildings at little or no upfront cost. The Committee’s first inquiry on this subject, Green Deal: watching brief, called for a clearer statement from Government of the projected outcomes of the Green Deal and the Energy Company Obligation.

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