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GGF Green Deal StatementPIC

GGF Green Deal Statement

picture of mock up green deal reportIn June 2012, the Department of Energy and Climate Change (DECC) released the
Secondary Legislation for Green Deal and Energy Company Obligation (ECO). The
GGF and political consultants GK Political have dissected the full information
and are now in a position to provide Members with an outline of the key concerns,
an up to date analysis of the Green Deal and ECO and how it could impact on the
Glass and Glazing Industry.

The concerns, issues, questions and the conclusions in this statement have been drawn from the
Federation’s work with Members and GK Political over the last two years and
recently released documents from DECC, including the Response to the
Consultation Responses contributions and the Progress of the Green Deal
Framework.

Since August 2010, the GGF
with political consultants GK Political, have been lobbying and working with
Government to ensure GGF Members of all sizes are included in the Green Deal
and ECO; the Government’s flagship initiative that aims to make 14 million
homes in the UK energy efficient by 2020.

The Federation has been
successful in holding Green Deal Debates with Members across the UK and
attending numerous meetings with Government officials, MPs, key influencers,
policy makers and large companies intending to be Green Deal Providers.

The GGF’s lobbying has been
rewarded with several successes such as the inclusion of replacement windows in
Green Deal and ECO and the removal of the obligation that Green Deal warranties
will no longer be required for the length of the Green Deal contract.

Throughout this process, the GGF has also been meeting with many prospective Green Deal Providers,
assessment bodies, and other trade associations to discuss ways to promote the
interests of GGF Members in relation to Green Deal and ECO. The GGF will
continue to seek ways to ensure that all of its Members who want to participate
in the Green Deal have access to the market.

 

The Key Concerns over Green Deal

1. The potential exclusion of
SMEs from Green Deal

Will Green Deal work for
businesses for of all sizes?

The Government is relying on
providers to make the Green Deal happen, and although it has developed a
legislative and regulatory framework for the Green Deal and ECO, it is letting
the ‘market to decide’ how it works in practice.

Many small companies fear that
Green Deal will be just for the major industry players. SMEs have expressed
concern they’ll be squeezed out of the market in the long term; on price,
difficulties in meeting Green Deal legislation, Government bureaucracy and also
because they believe the Green Deal assessment, which is likely to be paid for by providers, will not be
impartial. Another concern for SMEs is the economies of scale that will be
potentially required to make Green Deal work. Administration and preparation
costs will be difficult to cover unless a company receives a sufficient level
of Green Deal work.

Though the Government estimates that by 2015, 9,800 installers (of all types of work not just
glazing) will be needed to carry out Green Deal and ECO work each year, the
response to the Consultation did not show a clear way that SMEs could benefit
from Green Deal. To help develop ideas across industry, but the GGF has joined
the Government’s newly formed SME Green Deal Roundtable to discuss potential
business models, some of which involve SMEs as sub-contractors, and some which
involve trade associations and other representative bodies coming together to
work as a provider. DECC is also running Green Deal Roadshows for SMEs and more
recently a new group called Green Deal Conduit has been set up to help small
companies with Green Deal.

The GGF also continues to meet with a wide range of organisations to explore potential partnerships to help
provide Members with access to the market.

2. The Bureaucracy of Green
Deal

The many layers of involvement in Green Deal, may prove a tough sell to consumers and for companies. To give
an example of the bureaucratic process, Green Deal in theory could work in
these stages;

Stage 1: Homeowner contacts a Green Deal Assessor (either
independently or through a Green Deal Provider) to assess the property and
issue an Energy Performance Certificate (EPC).

Stage 2: If assessed independently, the Homeowner then has
to find a Green Deal Provider and agree a contract to undertake the
responsibility for the work and to access Green Deal finance.

Stage 3: The Green Deal Provider would then send the fuel
supplier (energy company) the property details of the Green Deal work to be
undertaken so the energy company can prepare the billing/payment method.

Stage 4: The Green Deal Provider then offers a selection of
suitable Green Deal Installers to the Homeowner

Stage 5: Homeowner agrees with the Green Deal Provider
which Green Deal Certified companies and products are to be installed.

Stage 6: Green Deal Provider then authorises the work to
the chosen Certified Green Deal Installer.

Stage 7: The Installer then arranges time and date with the
Homeowner to measure up and then proceeds to carry out the work.

Stage 8: The work gets carried out and completed

 

Stage 9: The job then gets registered with the Green Deal
Oversight Body

Stage 10: Satisfied that the Green Deal work has been
completed the Green Deal Provider then draws down the funding from the Energy
Supplier and then pays the Installer.

Stage 11: A new Energy Performance Certificate is issued to
the Homeowner.

There is no doubt it’s a convoluted process and this bureaucracy could cause cash flow issues for
companies who are used to dealing direct with consumers and not through a Green
Deal Provider. The Secondary Legislation and related documents released in June
appear to have made Green Deal even more complex. In the run up to Green Deal,
the GGF will endeavour to simplify the meaning of the Green Deal framework for
its Members and homeowners. There is a belief that once up and running the
process will become considerably shorter as relationships between Assessors,
Providers and Installers develop.

3. Fair Green Deal Assessment

The independence and impartiality of those conducting Green Deal assessments is still under scrutiny
with questions such as; “how will assessors be paid?” and, “who will pay them?”
to “how much will it cost?”

DECC has assured that Energy Performance Certificates will be portable and that “market forces” will
determine the cost and process of Green Deal Assessment, but there is still
uncertainty over the exact details of payment of assessors. A key principle of
the Green Deal is that the consumer can shop around with the results of the
assessment. This ability to compare offers is important, if the Green Deal is
to be competitive and offer best value for the consumer. However, if Green Deal
Providers carry out an assessment that is immediately available for all competitors
to access, this will act as a disincentive to provide assessments at no or low
cost. DECC is exploring options for a short grace period for Green Deal
Providers between carrying out an assessment and lodgement, to prevent
free-riding by competing suppliers. Talks with stakeholders are ongoing. Given
that discussions will focus on the potential to relax the lodgement timetable,
the costs to business will not increase as a result.

4. Unfair VAT issues

There is still no parity in the VAT when it comes to Green Deal products. Energy Efficient Glazing and
Doors are still at 20% while other Energy Efficient products in Green Deal are
currently at a reduced rate of 5% VAT. Across Green Deal measures, windows
compared to other products are unfairly penalised by having 20% VAT rate. This
would affect the outcome of the “golden rule” (the calculations in the
assessment that shows the cost of the work undertaken is less than the fuel
savings anticipated). Fuel is also at a reduced rate of VAT. The unfairness in
the VAT is a key concern because many of the costs of Green Deal will be taxed
at the standard rate of VAT while the benefits (fuel savings) will be at the
reduced rate.

5. Forcing companies to prove
the skills of their workforce

Many companies in the Glass and Glazing industry may not have to upskill their work force but will have to
pay to prove their competence if they are to be certified to undertake Green
Deal work – this will incur an increase in costs, time and effort. The Green
Deal Skills Alliance does not include glass and glazing. The GGF has been
lobbying Government to include glass and glazing in the Green Deal funding for
skills training.

6. The Green Deal Ombudsman

DECC has announced the appointment of Ombudsman Services Ltd as the provider of the Green Deal
Ombudsman and Investigation Service. This will be a free service which is easy
to use for customers who cannot reach an agreement with their Green Deal
Provider over a complaint.

In 2011, The Glazing Ombudsman
(TGO) was launched and has been supported and endorsed by the GGF Group since
its inception. TGO will continue discussions with Ombudsman Services Ltd to
look at the prospect of some form of partnership to help deal with disputes
arising from Green Deal work carried out in the glazing industry. This new
service will be up and running by October 2012 and is an important part of the
Government’s approach to ensuring consumer protection under the Green Deal.

7. The threat of new entrants
into the market

Several new (large) entrants have arrived in the market with little or no knowledge or experience of construction
or windows. However these new entrants have significant marketing clout and
could squeeze prices and affect the whole market.

From present information there are no barriers to market entry for Green Deal, though every installer wishing
to carry out Green Deal work must be certified by an Accredited Green Deal
Certification Body which must be registered to the Green Deal Oversight Body
who will be responsible for the registration of assessors, installers and
providers and monitoring compliance with the Code of Practice under the
Government’s flagship energy efficiency programme.

8. ECO Funding and the glazing
industry

According to The Electricity and Gas (Energy Company Obligation) Order 2012, under the carbon emissions
reduction obligation (for hard to treat properties) and carbon saving community
obligation, it was assumed that the glazing industry would benefit and be fully
considered within the proposed requirements.

However, the conditions for replacement windows under ECO states that “the installation of the replacement
windows must exceed the minimum energy efficiency standard applicable to that
measure”. In effect, this means that qualification for funding for replacement
windows under ECO is unlikely for most consumers because the replacement window
would (in line with Building Regulations minimum energy efficiency standard)
have to be replacing C-rated windows and above. Around 86% of houses in UK have
windows at lower ratings than a C rating, and this is especially likely to be
the case in houses to be targeted under ECO. The GGF is extremely concerned by
this exclusion and is lobbying hard to change the requirements so that all
windows in need of replacement to make a property more energy efficient can be
replaced using ECO funding.

9. Will Green Deal work?

Across the UK in the glass and glazing industry and in the broader construction industry, a frequently asked
question is; will Green Deal actually work? DECC has repeatedly stated, it is
down to the market to make it happen. However, many of the confirmed providers
have been relying on the Green Deal Finance Company (GDFC) to provide the
finance they will need, and the GDFC is in turn relying heavily on investment
from the Green Investment Bank – investment that has not yet been confirmed.
Furthermore, consumer research indicates a strong degree of apathy from
householders when it comes to energy efficiency products, and the bureaucracy
and added costs involved in going down the Green Deal route may make it an
altogether unappealing proposition.

 

Summary

The GGF remains cautious on whether Green Deal will work for the replacement glazing industry. However the
Federation will continue to work with Government and other relevant
organisations to try to ensure Green Deal works for GGF Members regardless of
size, status or profile.

In the build up to the launch of Green Deal in October, the Federation will be producing online aids and will
continue to furnish Members with up to date information as and when it happens.

For more information visit the
GGF website http://www.ggf.org.uk/green-deal-faqs

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