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April 14, 2016

Green Deal scheme failed to achieve value for money, says National Audit Office report

After spending an action-packed two days at the Cosmoprof Spa Bologna conference, Johanna Fragano returned with a fresh perspective on the present and future importance of a spa and the dividends it can bring to a hotel.

By Umesh Ellichipuram


The British Government’s Green Deal energy saving scheme cost taxpayers £17,000 for each home that was upgraded, and therefore has not ‘achieved value for money’, stated parliamentary watchdog the National Audit Office in its report.

Green Deal scheme cost energy firms £3bn in order to help households cut down their bills, as well as greenhouse gas emissions.

The scheme encouraged households to seek loans to pay for energy-saving measures such as insulation, however only 14,000 households took up this offer, which was far below what was estimated, and therefore the scheme had to be closed in 2015.

“The scheme was also not tested with consumers, and further saved only ‘negligible’ amounts of carbon dioxide (CO2).”

According to the watchdog, the scheme cost taxpayers £240m, including grants to stimulate demand. However, it has not generated additional energy savings because the Department of Energy and Climate Change’s (DECC’s) design and implementation did not persuade householders that energy efficiency measures are worth paying for.

The scheme was also not tested with consumers, and further saved only ‘negligible’ amounts of carbon dioxide (CO2).

According to the report, the average cost of reducing one tonne of carbon dioxide (CO2) was around £94 pounds, which is three times the cost of previous programmes.

The NAO report also stated that the parallel Energy Company Obligation (ECO) programme also raised costs for suppliers of energy, which in turn increased energy bills for households.

NAO head Amyas Morse said: "The Department of Energy and Climate Change’s ambitious aim to encourage households to pay for measures looked good on paper, as it would have reduced the financial burden of improvements on all energy consumers.

"But in practice, its Green Deal design not only failed to deliver any meaningful benefit, it increased suppliers’ costs, and therefore energy bills, in meeting their obligations through the ECO scheme."

The NAO said that the ECO scheme had, however, led to £6.2bn of notional savings on bills paid by fuel-poor sections.

The DECC now plans to create a new scheme to replace the ECO programme, to run from 2017 to 2022, which is expected to cut down the amount that households will have to contribute by £30 annually.

"The Department now needs to be more realistic about consumers’ and suppliers’ motivations when designing schemes in future to ensure it achieves its aims," added Morse.

Image: Only 14,000 households sought loans to pay for energy-saving measures. Photo: Courtesy of Lifeofgalileo/Wikipedia

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