Mayor’s Briefing Note on the Green Deal

July 2012: During last week’s Parliamentary debate on the four key Green Deal statutory instruments (SIs), Labour Shadow Energy Minister Luciana Berger MP mentioned the following:

“…I was surprised on Friday to receive an e-mail which began:

“Dear Luciana,  In advance of Monday’s Committee scrutiny of the Green Deal statutory instruments, I thought it may be helpful to send a very short briefing note from the Mayor of London.”
Once I had checked that it was not a joke—if anyone wants to see it, I have it here—I was delighted to find a neat little document setting out exactly what is lacking in the Minister’s current proposals and how they could be made much better.  I must ask the Minster, is it now Conservative policy to brief the Opposition on the weaknesses of their policies?” [Column 12/13 of debate]

The briefing provided by the Mayor’s office to Ms Berger can be downloaded here. It highlights the Mayor’s concerns that:

• “The capital has by far the highest number of needy properties of any region, but there is a real danger that these properties could be sidelined by Green Deal providers as a result of the current framework being proposed by Government.
• …there is a pressing need for an area allocation for the Energy Company Obligation (ECO). Without such a target there is a real danger that London will miss out on the attention it needs, as energy companies and Green Deal providers focus on treating areas that are cheaper and easier to retrofit.
• …without an area allocation to ensure that flats and mid-terraces – key markets in London for the Green Deal – are able to access ECO subsidies, there is a serious threat that these homes will miss out on the benefits of the scheme.
• Londoners could end up paying an additional £390m on their energy bills to fundthe Green Deal nationally, while the capital receives investment of only £156m in return –an unacceptable possibility given London’s specific needs.
  
• Only 1/3 of the suppliers for London’s unique RE:NEW scheme, which provides energy efficiency measures to needy London homes, have expressed interest in becoming Green Deal providers so far, and it is extremely important for the success of thescheme that more providers are encouraged to get involved in the capital.”
  

The issue of establishing a regional target for London – or area allocation as mentioned in the Mayor’s briefing note – has previously been considered – and rejected – by Government in the Green Deal consultation document from November 2011.  A section titled ‘Regional Distribution’ in the consultation [p132/133] stated:

“Concerns have also been raised that rural areas and inner cities have not been seen an equal, proportional level of delivery of energy efficiency measures under CERT – and that this perceived pattern might be borne out in the ECO without additional constraints being put in place.

“…There is some variation between regions, for example, 9.9% of homes in North East England but only 2.7% of homes in London received measures under CERT during the period of the analysis. However, it is very difficult to isolate the cause of any under delivery in specific areas as a number of factors are at play, including: previous activity; LA and other potential partner activity or resource; prevalence of different property types (flats, solid wall, etc); expense of activity (could economies of scale be generated); distance from installers; etc.

“…In view of the evidence from CERT, and consideration of the shift of focus that the ECO would entail, DECC does not see a case for introducing further constraints to delivery in geographical terms. There might be a case for reconsidering this position at a review point, when there would be evidence on the patterns of geographical distribution of measures from the new obligations. DECC would welcome further evidence on this issue during consultation.”

Consequently, the Government’s recent response to the consultation makes no comment on specific regional provisions at all.

The Mayor’s briefing note suggested that “Provision for area allocations could be delivered through secondary legislation or within the ECO brokerage document, which will set out how Green Deal providers can access ECO funding.” The Green Deal SIs were however ‘Affirmative instruments’ which means in Parliamentary language that Parliament could accept or reject the SIs but could not amend them. Government decisions on the ECO brokerage have however not been finalised as yet, and a further consultation on a model for this is to be held by DECC over the summer.