Green Deal Doomed To Fail

The Green Deal has been on shaky ground ever since the details of the deal have been researched and found to be inconsistent at best. However, the Government's latest set of figures could spell the end for a deal which has had so much lobbying, hours of debate in Parliament, and I'm sure many millions of pounds of invested research.

The Government's own figures released today show that if the Green Deal was to go ahead, the number of lofts being insulated will drop a staggering 93%! The number of lofts insulated would reach a lowly 70,000! The Green Deal initially predicted 2.1 million lofts to be done! The number of cavity walls being insulated would be a piddly 170,000 when it should have been 1.4 million!

The Green Deal was supposed to create 65,000. This looks seriously doubtful now. 


The Green Deal was originally to be funded by the banks and the biggest energy companies. They were the businesses that were supposed to stump up the cash. But what chance was there of that ever happening?! Banks are hardly lending to businesses in the first place, and energy companies are way too protective of their cash to start giving it away in loans.


Whilst the Green Deal was a good idea, the initial research and figures laid out by the Government were fundamentally flawed. The Green Deal removes obligations from energy companies to improve the energy efficiency of people's homes and leaves it to the market. The problem with that is when you remove and obligation, the lack of motivation with most people, for whatever reason, means that take-up of the deal will be very low. Hence these appalling figures by the Government's own research facilities.


So, what now? Assuming the Green Deal collapses, the Government should look to focus on other energy efficiency measures set by the last Government that have been proven to work and continue to do so.


With the GGF lobbying hard to make sure energy efficient windows were included in the deal, it would be interesting to get their perspective on this latest batch of disappointing figures.


The Guardian has an article with more in-depth analysis and reaction. Click Here.

Green Deal Hopefuls Show Poor Last Quarter Trading

Argos down 8.8%. Thorntons down 4.2%. Halfords down 4.8%. Mothercare down 3%.

Just yet another indication of how bad the retail sector has suffered over the last 12-18 weeks. Some have suffered so bad that they have gone into administration, like Blacks and La Senza.

The two most striking figures to come out of today's splurge of data reports are the ones to come from Tesco and Homebase, the two massive companies hoping to make an impact on the double glazing industry when the Green Deal (hopefully) comes into force in October of this year.

Homebase released figures today that showed a 2.6% drop in like-for-like sales in the 18 weeks up to Christmas from the year before. While Tesco over the same period posted a large and unexpected drop of 2.3%. This was so surprising and worrying, that Tesco shares had dropped 15% by 9am this morning! They have since recovered slightly to 13.5% at the time of writing this.

I don't know whether the Homebase drop in sales was expected, but I know from reaction on TV that people were definitely not expecting such a fall from Tesco. Both companies will have invested quite a lot of time, effort and money in setting up the double glazing parts of their business. Falls in revenue at this time, combined with a struggling retail sector will only add extra pressure. They will want to make sure that the Green Deal is actually implicated so that they can justify their investment in the double glazing market and hopefully regain some of those lost sales.

The Green Deal Will Fail

The Guardian has published an article explaining how the Green Deal will significantly fail to meet up to the targets set by the Government.


They claim that out of the 14 million households in need of upgrades, the scheme will only actually reach 2-3 million homes. It get's worse for the Government, as the CCC (Committee on Climate Change), the Government's own body, are the authors of the report!


The reason they give is thus: currently, energy companies have an obligation to homeowners to allow them to improve their energy efficiency. The Green Deal will actually take this obligation away. The 'Golden Rule' of the scheme is that the cost of the upgrades will be outweighed by the savings made, therefore more than paying for itself. However, by taking the obligation away from energy companies, the whole scheme is then left to the devices of the market.


The worry the CCC has is that if energy bills continue to rise at a very high and regular rate, any savings to be made are going to become harder to garner, dragging out the repayment of the loan given to pay for the upgrades in the first place! Of course it's not guaranteed that energy bills will continue on it's steep rising path, but who honestly believes that bills are going to level out or even decrease? I certainly don't.


The Guardian also points out that people may not actually want the hassle of having a whole raft of upgrades being done in their home. Not everyone wants to have windows replaced! People are also going to be worried about cowboys and poor installations.


So, for all the hype and wishful thinking, the Government really needs to get to grips with the real-life details and figure out how to make this scheme work, or risk a lot of hard work culminating in nothing.

Lenders Could Halt Green Deal

The Government is working very hard and very quickly to make sure that the Green Deal covers as many areas as possible, and that it's implemented as soon as is viable. Effort which I have to applaud, which isn't often said by me about this Government.

But there is one huge underlying factor which could derail the whole project. The Green Deal relies on lenders providing the money for loans to go towards home improvements. And by lenders we mean the private sector. By private sector we mean banks and the biggest energy providers. And herein lies the problem. Banks aren't lending nowhere near enough for small and medium size businesses to function properly. So why does the Government think that they are going to willingly stump up the extra cash for these home improvement loans? Especially as they are going to take an age to be repaid as they are counting on the energy savings made as the form of repayment.

The Government is also relying on the big 6 energy companies to pump some money into the idea. But we all know how energy companies are, very quick to take your money, extremely slow to give anything back.

The Government wishes to implement the Green Deal in October 2012. But the way the crisis in Europe is panning out, and how our own economy is quickly grinding to a messy halt, banks don't look set to increase their lending by anywhere near enough for quite some time. 

So, the question I pose is this: what is plan B for the Green Deal if private investment fails?

Green Deal Will Need Massive Public Awareness

If the Green Deal is to be a success (putting aside my skepticism that it will be dominated by the largest companies in the UK) then it will need to garner the same amount of public interest and awareness that the car scrappage scheme did.

The image above clearly shows that since the beginning of the year the Green Deal has become a much more popular term searched for in Google. This is a trend that is going to need to continue. These sorts of schemes only work when there is massive public awareness.

The other necessity is that for both the public and those businesses participating in it, the deal has to be easy to understand. There's nothing worse than trying to flog something which is too complicated to understand in full. Both parties will turn off to the idea. So the Government needs to make it as clear as possible to companies and customer how they qualify for the deal, what it entails, what can be bought through it etc. 

There are still many questions left unanswered about the Green Deal.  Even the initial explanation of how the Green Deal will work is still a little bit hard to digest. I'm sure in the coming months all issues with the scheme will become clearer.

Making A Stand

There are a lot of 'yes men' in our line of work. Those who say yes to things, but have no intention of following through on their promises.


Take FENSA for example. It was alerted to them that there was a company selling their certificates for £80 a piece. It was totally against their ethical code and when they spoke to me about it they said they would investigate, find the company and rectify the issue. So far I have heard absolutely nothing! Selling these certificates for such a large amount of money really does abuse the trust and faith of the customer in that company. Hence it was an issue I felt strongly about.


Then there is the GGF. The Green Deal is being threatened to be swallowed up by massive UK chains entering the double glazing industry for the first time, Tesco and Homebase for example. Weeks and weeks ago they promised that every company, no matter how big or small they were, would be able to have good access to the benefits the new scheme would bring. They said they had plans either in place, or being developed to make sure the boost would be shared equally. Again, so far, other than a debate about the scheme, I've heard absolutely nothing, despite the GGF assuring me they would be working hard to make sure we would all see a benefit.


So, FENSA and GGF. What are you going to do about it? This is a challenge to both of you. Either email me, or come on here and show how you are going to sort out the issues I've mentioned above. I won't let this drop and I won't let this go away. Both are important issues in my opinion and both deserve a speedy resolution.

Homebase Windows!

Here's the 'I told you so' moment!

As well as Tesco launching their own double glazing company, Homebase have now decided to enter the fray and have also launched their own double glazing service.

Having a very quick look through their online brochure, it looks relatively well set out, clear - easily explaining the order in which a customer can go about ordering their new windows. They make it clear which products are what and the brochure itself has a fresh and modern look to it. I was also particularly impressed with the price on the very back page. They quote £2900 including VAT for four casement windows and an entrance door. This to me is what four windows and a door should be being priced at, given the economic conditions right now.

So, both Homebase and Tesco look to be similarly priced, both with slick and professional sites (though Tesco's is more in-depth, but given time I'm sure Homebase will expand their site also), so look set to go head to head once the Green Deal is implemented in just eleven months time.

If you're involved in any way with these two giants of the commercial world, this is probably good news, especially if you're the companies supplying the windows and doors to them. However if you're one of the 14,000+ specialist double glazing companies in the UK hoping to get a slice of the Green Deal pie when it's put in place, it's probably just become a little harder to make the most of it. The whole reason why these companies, which have never ever sold windows before until now, are now selling them know that once the Green Deal starts, there's probably going to be a pretty sizable boost coming to the double glazing industry and they want to make the most of it. Problem is, most of us will most likely be shoved out of the way in the mean time.

Message to the GGF: don't let the commercial juggernauts swallow up what could be a potential big boost for the genuine double glazing community.

Homebase, according to their website, claim to be FENSA accredited installers. Though it's more than likely that they will be using a home improvements company, like Tesco use AJWD, to install the windows on their behalf.

As I get to know more details about this I will post them on here! 

Potential Green Deal Disaster

The more you look at the Green Deal, the more you realise that small window companies (which make up a lot of our industry) are going to struggle to be able to take advantage of it. But first, some clarity on what the Green Deal is and how it is going to work:


According to the GGF: Green Deal is the Coalition Government's flagship policy for improving the energy efficiency of existing buildings in Great Britain. It is a new market framework and is based on a key principle that the cost of some energy efficiency measures pay for themselves, in effect, through the resulting savings on fuel bills.


Green Deal Finance: Green Deal finance will not be a personal loan on the householder or building owner but will in fact be a debt held on the property. Future owners of the property will take on the remaining elements of the Green Deal until payment is complete.


To be part of the scheme, you have to register to become a Green Deal Provider. To become a Provider you will be subject to strict assessments apparently. As a Provider, you will be responsible for providing the finance. Here's where it becomes a little bit more difficult for the really small companies. Providers will be responsible for carrying out an energy assessment on the property. The assessment will identify what measures the homeowner needs to take to improve the energy efficiency of their home. Also, the Provider must also then carry out another assessment to judge how well the measures that have been taken are doing, and provide feedback. 


The Green Deal loans will be re-paid by the homeowner via the respective energy bills. Crucially, if that homeowner moves, the loan stays with the house, not with the tenants. So the new home owners will have to pick up that bill. 


The Golden Rule: Above all, the expected savings to be made on any Green Deal project must be greater than the cost of the work done.


Big multi-national companies such as B & Q, Marks and Spencer and British Gas have been mentioned as possible Green Deal Providers. We already know that Tesco has positioned itself ready to take advantage of the deal when it comes to pass. 


I have two concerns regarding the deal. Firstly, with all the massive companies being mentioned as being possible providers, is there going to be any room for the small guys in our industry. In comparison, even the large companies within this industry would be dwarfed by the other companies mentioned above. The GGF has worked hard to include windows in the Green Deal, the worst thing that could happen is for companies like Tesco to go a steal all the business.


My second worry is that the amount of checks, assessments, tests, and all the other extra work involved in being a Provider will be far too much for the smaller companies to cope with. For the larger businesses with the staff and financial backup, this won't be a problem. But if the WHOLE industry is to benefit from the deal, then our large organisations, the GGF and FENSA need to have plans in place to make sure that everyone gets a piece of the pie.


The plan isn't due for another year. So I hope that plans for everyone will be announced and explained well before October 2012 so that everyone can ready themselves for what should be a significant boost for our sector.

5% VAT For Energy Rated Windows

Finally, windows and doors look set to be recognized by our Government, by being included in the Green Deal, due to hit our shops October 2012. But this isn't going to be enough to help our beleaguered industry. Any advantage caused by the introduction of the Green Deal looks set to be swallowed up by super-companies such as Tesco.


Energy efficient windows should be granted the same VAT status as other energy efficient home improvements. If windows are going to be promoted to the same levels as insulation and others, then they should also be given the same VAT break. There will be obvious positive cost implications for the whole industry, and will help put replacement windows and doors at the forefront of people's minds.


The GGF did well to lobby the Government into including replacement windows and doors for the Green Deal. Maybe it can throw it's weight behind a campaign to allow energy efficient windows and doors to qualify for 5% VAT status. I know that this is something the whole industry would get behind and fully support.

Green Deal Bad For The Industry?

I heard an interesting comment during a meeting with one of our suppliers last week, in which it was mentioned that if the general public find out that windows are set to be included in the Green Deal, people may wait until the deal is in place.


The obvious problem being here that the Green Deal isn't set to roll out until October 2012 by all accounts. I know I'm risking this sort of information getting out to the public, but I'm using the excuse that not many of the general public will read this!


The industry has been campaigning for replacement windows and doors to be included in the new scheme. But we may have overlooked one or two issues. The first is the potential for the general public to wait until they can access the Green Deal, as I've explained. But also, the introduction of massive companies, such as Tesco, who have up to now nothing to do with double glazing, are now looking to take advantage of the major possibilities that the Green Deal could provide.


We don't want to shoot ourselves in the foot, but there is a chance that we already have. My hope is that when the Green Deal is introduced it will allow for the new business generated to be spread evenly throughout the industry, rather than in just pockets and to the biggest businesses. However, as with other similar schemes, the giant companies always seem to make the most money.