A failure to test the Government’s flagship home energy efficiency scheme with consumers led to “abysmal” take-up, the Public Accounts Committee has said.
The “green deal” closed last year having provided just £50 million in 14,000 loans to households to boost energy efficiency, far less than the £1.1 billion predicted by the Government and racking up costs to the taxpayer of £17,000 per loan.
Department of Energy and Climate Change (Decc) projections for the scale of the scheme were “wildly optimistic” and gave a completely misleading picture of the scheme’s prospects to Parliament, the Public Accounts Committee (PAC) said.
In a damning report on the scheme, which provided loans to meet costs of installing efficiency measures which householders paid back from savings on their energy bills, the committee urged the Government to learn from its mistakes.
When the scheme was introduced in 2013, it had not been adequately tested with consumers.
“In practice, householders were not persuaded that energy efficiency measures were worth paying for through the Green Deal and take-up of loans was abysmal,” the report said.
It was overly complex, with excessive paperwork, while people were also put off by interest rates of between 7% and 10% on the loans – higher than finance they could find independently elsewhere, the PAC said.
Marketing also focused on the financial benefits of installing energy-efficiency measures, rather than emphasising the comfort of having a well-insulated, energy-efficient home which people may have found more appealing, the report said.
Meg Hillier, chairwoman of the PAC, said: “Not enough work went into establishing the scheme’s appeal to households, nor to its implementation, nor to examining the experience of governments setting up similar schemes overseas.
“This blinkered approach resulted in a truly dismal take-up for green deal loans and a cost to taxpayers of £17,000 for every loan arranged.”
Decc spent £240 million on the scheme, including £25 million in loans to the Green Deal Finance Company, set up to provide finance for the scheme. It does not expect to get the £25 million back.
A complementary scheme, the Energy Company Obligation (ECO), through which suppliers provided efficiency measures paid for by consumer bills, led to improvements in more than 1.4 million homes.
But Decc did not have the information it needed to measure the effect of ECO, particularly on the aim of reducing fuel poverty, the committee said.
Ms Hillier added: “There is no doubt householders and taxpayers in general have been ill-served by these schemes and the Government must learn from its mistakes to ensure they are not repeated in this or indeed any other policy areas.”
A spokeswoman for the new Department for Business, Energy and Industrial Strategy said: “This Government took action last year by stopping public funding to the Green Deal Finance Company and setting up an independent review of the energy efficiency sector.
“The lessons that we have learnt will help us to develop simpler, better value for money policies, targeting people who need support most.”
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