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Neil Smith, Head of Research & Innovation, NHBC
The Life of the Green Deal
Nicole Barrett ACQI is a quality and compliance expert who has seen Green Deal from behind the curtain.
Here’s her response to our recent blog about the demise of the Green Deal.
I
ntroducing Nicole Barrett
Nicole has been working in quality and compliance for 15 years. She runs Compliance and Business Support Services, which provides niche support services to businesses, charities and local and central government. Nicole has been involved with the Green Deal since 2012 and – in our view – knows as much as anyone about its regulatory and compliance demands.
As pointed out on this website, Green Deal has had a difficult time. My view on the reasons why is a little different to those given in Liz’s blog - and doesn’t relate to bicycles. I work in Compliance, for my sins…
So why oh why did Government pull the Green Deal so suddenly?
#1 Why – The Green Deal Loan was designed to be delivered by tradespeople
Green Deal was meant to be delivered by businesses highly experienced installing energy efficiency products such as boilers, solar panels and insulation. It made complete sense on a practical level, yet no sense when considering that it came down to a builder selling a consumer a 25 year loan. No disrespect to the builder but the funding and installation of a boiler are very different to the financing of a boiler.
Government had faith in the industry and believed that businesses would rise to the challenge. Whilst they did rise to the challenge of selling and processing Green Deal finance, compliance with applicable rules would be debatable.
#2 Why – The Green Deal was designed before significant changes in regulation became necessary
The initial policy was designed around the letter of the law within the Consumer Credit Act and guidance issued by the Office of Fair Trading (OFT). Then the markets crashed in 2008/2009 and we all know the struggles we have gone through and still go through to this day.
As a result of the crash, the OFT and other financial regulators were scrapped as they clearly could not protect consumers sufficiently. Since 2014, the Financial Conduct Authority (FCA) has been in charge of Consumer Credit. Remember, Green Deal was already up and running at this point.
From 2014 onwards, the Green Deal no longer worked just under the letter of the law but instead under the law as well as other significant financial regulation. This is now a completely different ball game. With the rules being so very different now, doubts could be placed on the way in which Green Deal Finance is sold, repaid and managed.
#3 Why – The Green Investment Bank withdrew its finance package recently
Green Deal Finance was due to be supported by an investment package of over £130 million from the Green Investment Bank. This package was designed to establish a secure market over the course of the initial hiccups and development. It should have been expected to take at least five years for initial problems to be overcome and considerably longer for Green Deal to be embedded into our day-to-day lives.
The bank decided to withdraw suddenly, leaving the Government to issue a rescue package of over £30 million. Simple maths says that £30m does not equal £130m, leaving a massive investment gap. This is of course not sustainable for Government or indeed the taxpayer, and was never designed to be. Cutting it short at the point of having used the £30million will allow for the programme to be assessed, redesigned and - hopefully - reissued sooner rather than later.
Green Deal 2.0
The Green Deal programme will be reviewed in full as it does not currently meet the requirements of new rules and regulations. So pulling it off the market, in a way, is the best protection for consumers, Green Deal businesses and government right now. It’s a matter of reviewing what has worked, what has not and why, then using the solid platform of the existing Green Deal market to relaunch I haven’t given up on the idea of Green Deal yet, just like some people haven’t given up on the idea of socialism (picture chosed by Liz, with apologies!). It has a place in the market, yet its first version was far from ideal.
Green Deal Mark 1 has delivered £100,000,000 of investment into the housing stock in under 3 years; of that only 35% (ish) was a taxpayer-pick-me-up. It will be repaid to taxpayers and other investors with interest. In the finance world, this is a massive success, especially if we keep in mind that there was ZERO infrastructure to begin with.
Green Deal 2.0 will build on this infrastructure. It won’t be here tomorrow or even by Christmas. Give it a year and we might have a decent restart on our hands.
I would personally suggest separating the financial product from the practical delivery. As a customer, I should be able to go to my bank, loan provider or through an exclusive Green Deal Provider. The IT systems are in place now, so it shouldn’t be too hard.
I would also suggest changing the Green Deal Assessor / Advice Organisation. Whilst a great way to do business, a GDAO has no enforcement rights whatsoever. The management of Green Deal Advisors could sit directly with the Certification Bodies to allow for full enforcement, CPD etc or alternatively considerable changes should be made to the regulative powers of Advice Organisations.
Installation companies should be required to evidence practical experience instead of ‘just’ undergoing a certification for PAS2030. It should be a requirement that those working for a Green Deal installer meet minimum NVQ requirements in a relevant subject. A certification cannot replace practical experience and verification of individuals. I am in favour of the German way of doing things, I do admit to that openly!
The Green Deal Finance product itself needs to change with regards to its terms and conditions and must be adjustable in line with changes to legislation in the future.
Green Deal Monitoring could be moved to certification bodies and the FCA, removing the need for the GD Oversight and Regulation Body in its current form. Furthermore, the requirements for the Green Deal Ombudsman should be reviewed.
Such changes would be far reaching and upsetting to those of us who have worked incredibly hard at this programme. We do now need to look at how we can work with what we have learnt to make it the long lasting success that we all so truly deserve.
Want to contact Nicole Barrett? Get in touch with Nicole on 01424 236155 or email info@cbsservices.co.uk.
Want your say? Email liz.warren@se--2.co.uk and tell us what you think about the past, present and future of Green Deal.