Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
I’m trying to be positive, really I am.
I know that I may have been guilty of dissing the Green Deal even before it launched. Let’s face it, I was dissing it even before the launch-that-wasn’t-a-launch back in October. But as someone pointed out on Twitter this morning, it’s probably the best mechanism, we’ve got and a lot of hard work and effort has gone into it so let’s give it a fair chance.
OK, let’s give it a fair chance. After all, Grafton, TP, NMBS and Wolseley have signed up either to be or to be partners with, Green Deal providers, so they must think that it is worth being at the party.
So today, the day that the scheme is fully launched to the public, I’ve been going through the news stories and the comments and the blogs, trying to approach it like a “normal” human being, one to whom it is news, rather than an old cynic who’s been hearing about it for the last two years.
In principle then, the idea that one can improve the energy efficiency of one’s property without any huge, upfront cost has got to be appealing, right? It can only be a good thing to try and improve the energy efficiency of the UK, right?
The concern from this part of the industry has, of course, always been that it could get hi-jacked by big business, in the same way CERT was (and don’t forget that Grant Shapps’ first thoughts on this were that householders could pay part of their debt via their weekly shop at Sainsburys or M&S).
To be fair to DECC, they have been quite concerned about this themselves, which is why they have been in talks with the BMF and the FMB during the set-up period. Although, to be honest, “in talks with” isn’t actually the same as “listening to”.
Buy now, pay later is something that most householders are familiar with – just look at any advert for sofas or some of the less reputable double glazing firms. But it’s the cost of the loan that I think many people will blanch at.
DECC has set its headline rate at 6.9%, though the actual rate set by the Green Deal Provider could be anything between 6% and 9%. At a time when the Bank of England base rate is 0.5%, and mortgages can be had for less than 4%, a rate of 6.9% is not what I’d call “good value”.
Drill down through the small print of the DECC announcement today and you find out that there is a minimum payback period of 10 years and a maximum of 25. There’s also a Green Deal Provider fee of around £20 a year which may or may not be included in the total loan amount.
And should you come into money or want to sell your home free from transferable debt, well, you may or may not be able to repay the loan early. Just like a mortgage, there may be an early-redemption charge, depending on whether the Green Deal provider feels like it.
Which makes me think, if the loan is going to act like a mortgage, then householders might just as easily borrow the money elsewhere at lower rates and just benefit from the reduced energy bills anyway.
Incidentally, when this loan rate was mentioned on the radio this morning, my husband – who, despite living within the same four walls as my good self had never heard about the Green Deal – exclaimed “6%? Are they joking? What, is the Government going into loan-sharking now?”
Some of us remain to be convinced that the scheme will do what it says it will. But I’ll be very happy to be proved wrong.