On Thursday 24 July the Government announced the closure of the Green Deal Home Improvement Fund (GDHIF), just six weeks after its launch in June. The closure was in response to a surge in applications following the announcement of the funding cut on the 22 July.
The applicants are largely property developers and construction firms, not the local installers that are working in communities with hard to treat properties. The number of households helped via the fund is miniscule compared to the number of hard to treat properties in the country.
The funding cut meant that from Friday 25 July 2014 new applicants would receive one third less, or £4,000, towards installing external wall insulation, instead of £6,000. Then suddenly on Thursday 24 July, DECC and MP Amber Rudd, the newly appointed Parliamentary Under Secretary of State for Climate Change, announced that due to overwhelming popular demand, the GDHIF was closed for applications with immediate effect. The £50 million budget had been reached.
The cut to the GDHIF is damaging as many of the measures included have long payback periods discouraging investment. DECC’s impulsive action to close the fund means that homeowners may no longer be interested in pursuing the planned installations. In turn this will affect insulation installers, especially smaller, local businesses, which, due to the inconsistent policy and sudden changes, spend a lot of time quoting for the work only to lose customers and consequently income. This is on the back of the recent cuts in Energy Company Obligation (ECO) funding that will impact people in fuel poverty this winter.
This rash action from the Government is not new. Delays in starting the Green Deal, meant that the transition from CERT and CESP to ECO created an instable investment market, stagnating the economy. It has also been revealed that the Green Deal costs more to operate than it has given out: figures from 2013 highlighted administration costs of £44,586 a month*.
In 2011, the Feed In Tariff (FIT) for electricity from solar panels was cut by 40% after less than a year. This is despite the success of the programme, with 316MW of solar PV installed, enough to power 72,000 homes, in the first 18 months. The FIT programme saw the rapid rise in Solar PV suppliers, from about 700 in 2009 to almost 4,000 by 2011. This number has now declined to 2,700. We are now seeing the same for insulation firms, illustrating the government’s consistent failure to stimulate growth in the labour market for clean tech industries.
The green economy is growing at 5% per annum**, despite these changes. We can only speculate on the growth rate that would occur were the government to adopt a logical and consistent policy for supporting the clean tech economy which is necessary for the UK to become more energy secure, reach it’s climate change targets and most importantly allow our population to live in more comfortable, energy efficient and less expensive homes.