Appendix: Government Response
Introduction
The Green Deal is the Government's ambitious twenty-year
programme designed to deliver energy efficiency improvements throughout
Great Britain on an unprecedented scale. It will make a significant
contribution to the Government's work to reduce carbon emissions.
It is a long-term and progressive programme, providing real opportunity
for business growth and with the interest of consumers at its
core. While the Green Deal is in its early stages of operation,
it is already encouraging consumers to take action to keep their
homes warm and bills down.
We are very grateful to the Energy and Climate Change
Select Committee for conducting its inquiry into the Green Deal
programme and its report of that inquiry, Green Deal: Watching
Brief, published on 22 May 2013. The Committee has made a
number of important and helpful recommendations and this memorandum
addresses those recommendations, constituting the Government's
response to the report. In the following sections we provide
the committee's recommendations in italics followed by the government
response. These are in two main sections (objectives outcomes
and monitoring methodology; and, monitoring progress) reflecting
the structure of the Committee's report. In some cases we will
need to consider further how the particular circumstances of Scotland
need to be reflected in our approach to data collection and evaluation.
Objectives, outcomes and monitoring methodology
2. We hope that, in the spirit of open scrutiny,
the Department will set out in its response to this report what
the most recent projected outcomes of the Green Deal and ECO are.
In addition to expected carbon savings, it would be useful to
identify outcomes for DECC's other objectives of the scheme (namely:
boosting the low carbon economy, empowering consumers, empowering
businesses, levering in new private investment, and ensuring consumer
standards are met). (Paragraph 16)
3. While it would be useful for
the Department to set out projections for uptake of the
Green Deal, we do not believe that it is appropriate to set targets.
The Green Deal uses a market-based approach and so setting fixed
targets could lead to hard-selling or even mis-selling in order
to meet goals. This would be detrimental to consumers. (Paragraph
18)
The Government agrees that it is important to assess
the success of the programme in terms of overall impact and also
that setting fixed targets is not appropriate for what is a market-based
approach.
The Government considers that saving carbon is the
principal objective of the programme and has projected savings
of 4.5 million tonnes of CO2 per year by 2020 through the Green
Deal and the Energy Company Obligation (ECO). We recognise that
this is a long term projection and that the Committee will want
to understand progress in the shorter term. We can therefore confirm
that our expectation for March 2015 is to see one or more energy
efficiency improvement measures fitted in 1 million households
whether through the Energy Company Obligation, Green Deal finance
or other financing options (or, indeed, through combinations of
these financing options). Consumer choice, including around the
use of finance, is key to the success of Green Deal.
The Green Deal and ECO offer significant opportunities
to boost the low carbon economy and the following numbers of companies
have already been registered and approved to act under Green Deal
as at 16 June 2013:
- 63 companies to act as Green
Deal Providers
- 1254 companies to act as Installer Organisations
- 206 companies to act as Assessor Organisations
In support of these companies, the Government has
made £3.5m available to support training programmes for assessors
and solid wall insulation installers. We will continue to monitor
numbers of accreditations and to publicly report on them. We have
not set simple numerical aspirations for numbers of registrations
as this would not reflect the rich diversity in the type and size
of companies that we expect - and are already seeing - to want
to become involved in Green Deal.
Our Impact Assessment included projections on numbers
of jobs, namely that the Green Deal and ECO will support 39,000-60,000
jobs in the insulation sector by 2015 - an increase from 26,000
in 2011.
On empowering consumers, we see choice as critical
and the numbers of companies that are participating under the
Green Deal framework, as set out above, is very relevant. But
it is also important that consumers have access to the impartial
advice that is available through the Energy Saving Advice Service
(ESAS) that the Department of Energy and Climate Change (DECC)
has set up and that they can seek redress, if problems are encountered,
through the Ombudsman that we have put in place. Our response
regarding the statistics on both these services is later in this
memorandum.
The elements of the framework that empower consumers
(and ensure consumer standards are met) will also empower businesses
as consumer trust in the Green Deal is essential to take up. Therefore
the ability of the companies that are registered under Green Deal
to use the Quality Mark symbol is vital to those companies in
terms of demonstrating that they are reliable and will deliver
work to good standards.
The Green Deal and ECO will lever in finance from
the Green Deal Finance Company (GDFC) as well as from other sources.
Our projection for ECO spend is £1.3bn per annum and the
Green Deal Finance Company (GDFC) has a funding package of £244
million. We are tracking spend against both of these. Where consumers
install energy efficiency measures using other forms of finance,
understanding spending is more challenging. But there is information
available to us that will help including: take-up of the cashback
scheme; updates to Energy Performance Certificates that are lodged
on the EPC database following installation of measures; and, sample
surveys of what households have done following assessments. We
have already undertaken one household survey. The results, published
on 25 June 2013, can be found at:
https://www.gov.uk/government/publications/green-deal-assessment-survey-summary-report
4. We encourage DECC to finalise its evaluation
strategy for the Green Deal as soon as possible. This is particularly
important for areas where baseline measurements will be required
to assess changes over time (such as energy usage before and after
measures are installed). (Paragraph 22)
5. We believe that all of the methods outlined
in paragraph 23 could form a useful part of a monitoring and evaluation
programme for the Green Deal. Two in particular strike us as being
particularly important: research that seeks to understand consumer
experiences on a longitudinal basis (following the Green Deal
process from start to finish) and expert assessment of actual
energy usage and expenditure on bills before and after measures
are installed. We recognise that these types of study can be expensive
to carry out. We therefore recommend that DECC should attempt
to co-ordinate its own evaluation studies with research being
carried out by other institutions in this area, in order to maximise
the utility of any data being collected. For example, the five
End Use Energy Demand research centres that were announced in
late 2012 could potentially contribute towards the evaluation
process. Energy companies will also conduct their own monitoring.
DECC should use the Low Carbon Innovation Coordination Group to
ensure that research is properly joined-up and provides the maximum
use to policy makers. (Paragraph 24)
6. While we recognise that there will be a time
lag involved in collecting some data—such as measuring energy
usage, which needs to take place over a number of years—it
is nevertheless essential to carry out monitoring of impacts in
the short-term too, so that any teething problems can be identified
and ironed out at an early stage. (Paragraph
26)
DECC's evaluation strategy covers both an assessment
of the impacts of Green Deal and ECO and an assessment of the
effectiveness of the delivery framework that has been put in place.
A range of projects evaluating key areas of the delivery framework
is envisaged, including projects looking at consumer experiences
at different stages in the customer journey. The evidence gathered
will enable us to help improve the efficacy of the delivery framework
as it matures as well as monitor the impact of the programme over
time.
As well as longer term work, we are aware that early
investigation and evidence is also likely to be helpful. The research
survey on the early assessment experience is referred to above.
In addition, awareness of the Green Deal has been tracked since
November 2012, and the findings of this research were published
on 25 June 2013 and can be found at:
https://www.gov.uk/government/publications/green-deal-household-tracker-survey-waves-1-and-2-report
DECC is currently procuring a supplier to deliver
the evaluation of the delivery framework. We acknowledge the Committee's
helpful advice on co-ordinating evaluation with research being
carried out by other institutions. We expect the supplier to be
in place in August and we will work with them to explore opportunities
to join up with third parties where it is practical and cost-effective
to do so.
Monitoring progress
7. We welcome DECC's intention to monitor awareness
of the Green Deal over time. We recommend that this research
should include an evaluation of DECC's marketing campaign and
cashback incentive scheme to assess their effectiveness in raising
awareness and stimulating interest in the Green Deal. The
Committee would find the outputs of this monitoring and evaluation
work useful in its scrutiny of the Green Deal and we hope that
DECC will share this information with us in due course. (Paragraph
34)
The Government already has plans in place to evaluate
the marketing campaign and cashback incentive scheme. The evaluation
of the marketing campaign will be conducted over the summer and
the cashback scheme will be evaluated once it has closed which
will be March 2014, or earlier if the funds are depleted. These
findings will be published in due course. As noted above, the
first research findings on awareness of the Green Deal have been
already been published. The Green Deal Household Tracker found
that awareness of the Green Deal had increased from 10 per cent
pre-launch in November 2012 to 22 per cent in May 2013.
8. We welcome DECC's intention to regularly track
the number of assessments carried out, number of Green Deal plans
taken out and number and types of energy efficiency measures installed.
(Paragraph 36)
9. DECC should monitor the "drop out"
rate at each stage of the Green Deal process. This will require
the data collected by the Energy Saving Trust (on usage of the
Energy Savings Advice Service), Landmark (on Energy Performance
Certificates (EPCs) lodged as part of a Green Deal Assessment)
and Gemserv (on Green Deal plans taken out) to be collated. DECC
should ensure that data is collected in a consistent manner to
ensure that it is possible to combine it at a later point in order
to track households' progress from start to finish of the Green
Deal process. Alternatively, DECC could seek to monitor "drop
outs" as part of the collaborative research process described
in paragraph 24. (Paragraph 39)
10. DECC should seek
to monitor the reasons for any "drop outs" along the
Green Deal process. This data may help DECC identify any barriers
to take up as well as to demonstrate the wider success of the
Green Deal project if consumers are making efficiency improvements
to their homes arising from a Green Deal assessment, without drawing
on Green Deal Resources. The longitudinal research described in
paragraph 24 could be used for this purpose. (Paragraph
43)
DECC wants to be open and transparent and has issued
Green Deal statistics on a monthly basis since March including
numbers of Green Deal Assessments. Since June the statistics have
also included Green Deal Plans taken out and ECO measures installed.
We agree with the Committee that this data is important, but we
would emphasise again that there are a range of financing options
for customers to choose from following a Green Deal assessment,
not just Green Deal Plans. While assessments do not always result
in plans, this does not necessarily reflect attrition from the
process altogether, and we would challenge the concept of 'drop
out'. We also believe that it would be inappropriate to put too
much weight on data on numbers of calls to ESAS as their nature
varies considerably (we address this further below). But we do
believe that it is important to understand the links between awareness,
assessments, installations and, ultimately, carbon and bill savings.
We will continue to monitor this through both quantitative and
qualitative research. The research DECC published on 25th June
covered consumers' actions and intentions after having had a Green
Deal Assessment and can be found at:
https://www.gov.uk/government/publications/green-deal-assessment-survey-summary-report
11. We welcome DECC's intention to monitor carbon
savings resulting from Green Deal and ECO. However, while data
on estimated savings can be collected from EPCs, it is not clear
to us exactly how DECC intends to measure actual savings.
We recommend that the Department explains its intended methodology
for this in its response to this report. (Paragraph 44)
12. It is crucial that DECC monitors whether the
Green Deal and ECO are delivering carbon savings in practice (in
addition to the estimated savings generated by the schemes). DECC
should aim to measure carbon savings on an annual basis, starting
a year after the launch of the scheme in 2014. Since this
is not a straightforward operation and may require costly research,
we recommend that the collaborative approach described in paragraph
24 be used to investigate this point. It is important that the
right baseline measurements are taken ahead of a Green Deal or
ECO package being installed to ensure that it is possible to make
a before/after comparison. (Paragraph 46)
We agree that it would be useful to monitor whether
the Green Deal and ECO are delivering carbon savings in practice.
The Government will use data from the National Energy Efficiency
Database (NEED) to monitor actual carbon savings resulting from
Green Deal and ECO. This will require comparing energy usage in
2014 (i.e. post-installation) with that from pre-installation.
There are necessary lags involved in this analysis and, as such,
the aim is to make this information available - for installations
taking place in 2013 - in 2016. We will also provide additional
information from physical monitoring work taking place through
other funding mechanisms, and information on carbon savings generated
by some measures included in the Green Deal including cavity wall
insulation, loft insulation and replacement boilers.
13. We recommend that the collaborative
research approach outlined in paragraph 24 be used to monitor
actual household expenditure over time and to investigate whether
participating households are actually saving money in practice.
(Paragraph 50)
We agree that it would be useful to monitor actual
household expenditure over time. We are considering how to secure
this information and the precise approach we take will necessarily
depend on practicality and cost.
14. We welcome DECC's intention to monitor the
geographical coverage of Green Deal take-up and take-up among
fuel poor consumers and carbon saving communities. We recommend
that DECC should also investigate other distributional impacts
and should monitor take-up by tenure, property type and socio-economic
classification/income decile. (Paragraph 57)
Monitoring the coverage and take-up of the Green
Deal is a central part of our research and intelligence agenda
for the programme and therefore we accept the Committee's recommendation
to include distributional impacts. We will use a proxy approach
on location to determine socio-economic classification. The first
findings on distributional impacts were published on 27 June 2013
at:
https://www.gov.uk/government/publications/green-deal-and-energy-company-obligation-eco-q1-statistics.
The findings showed that:
- 84 per cent of GD Assessments
up to end March were in owner-occupied properties (7,667), with
the remainder split equally between the private rented sector
and the social rented sector.
- 82 per cent of GD Assessments
up to end March were in houses (7,550), 10 per cent were in bungalows
(896), seven per cent were in flats (637) and two per cent were
in maisonettes (141).
15. We welcome DECC's intention to track consumer
satisfaction with the Green Deal. We recommend that this
should include investigation of: understanding and perception
of financial savings achieved; experience of sales and marketing
practices; experience and understanding of the assessment, quote
and installation process; experience of customer service and redress
processes; and experiences of consumers wishing to move home or
settle early. There should also be a focus on the experiences
of fuel poor and/or low income households to ensure that they
are not being sold Green Deals inappropriately. The longitudinal
research approach outlined in paragraph 24 could be used to investigate
consumers' experiences of the Green Deal process. (Paragraph
65)
We welcome the Committee's acknowledgment of our
commitment to tracking consumer satisfaction with the Green Deal
and the research published by DECC on 25 June on the early assessment
experience is evidence of this. This research found that:
- The majority of consumers who
had had a Green Deal assessment were satisfied with how long they
had to wait for an appointment (76 per cent) and with the ease
of finding an assessor (62 per cent).
- 75 per cent of households found the assessment
useful and 77 per cent had confidence in the recommendations made
by the assessor.
- Households were asked which things were made
clear to them in either the Green Deal Assessment Report or in
discussion with the assessor: 74 per cent said it was clear which
energy saving improvements were recommended during the assessment,
64 per cent said it was clear what the improvements would entail
and 61 per cent said the next steps were clear.
We broadly agree with the Committee's recommendations
on the elements of consumer satisfaction that should be investigated
and that conducting research into the experiences of the fuel
poor and/or low income households should be undertaken. We anticipate
this will be part of the main evaluation. However, the methodology
for this research will be decided as part of the existing procurement
exercise and will be subject to coherence with the overall evaluation
strategy and resource constraints.
16. The Committee would find the following
information useful in its on-going scrutiny of the Green Deal:
- the number of calls made
per month to the Energy Saving Advice Service (Paragraph
35);
Call numbers to the Energy Savings Advice Service
have been high, over a quarter of a million calls since April
2012 and numbers received in April/May 2013 have more than doubled
compared to the equivalent period last year. However, ESAS covers
a range of issues beyond Green Deal. It is also the case that
call volumes can tell different stories. Falling numbers for instance,
could be a sign of a move to digital channels or more call handling
by Green Deal Companies. We are considering how we can best organise
this data.
- the number of unique
visits per month to DECC's Green Deal website (gov.uk/greendeal)
(Paragraph 35);
We accept the Committee's recommendation to make
available information on the number of unique visits per month
to DECC's Green Deal website.
- the value of cashback
incentives paid out per month (Paragraph
35);
DECC publishes as part of the monthly Official Statistics
release the value of cashback incentives paid out per month and
therefore accepts this recommendation. The latest Official Statistics
showed that 5,118 cashback vouchers had been issued to 16 June.
Of these, 968 cashback vouchers had been paid (following installation
of measures) up to 16 June with a value of £263,452.
- the proportion of Green
Deals that are taken out by individual households compared with
organisations acting on behalf of individuals (such as housing
associations and local authorities)
(Paragraph 36);
We do not hold information on the proportion of Green
Deals that are taken out by individual households compared with
organisations acting on behalf of individuals and therefore cannot
action this recommendation in the way envisaged. We are thinking
further about the evidence in this area. As a proxy in the short
term, we do publish quarterly data on the number of assessments
by tenure, and in due course will publish quarterly data on the
number of plans by tenure.
- the number of households
that contact the Energy Saving Advice Service but do not go on
to have a Green Deal Assessment (Paragraph
40);
The Energy Saving Advice Service (ESAS) offers impartial
energy-saving advice. It is not a sales service and consumers
call the service for a range of reasons including schemes beyond
the Green Deal. We do not hold sufficiently accurate information
on the number of households that contact the Energy Saving Advice
Service on Green Deal, but do not go on to have a Green Deal Assessment.
Robust information would be disproportionately difficult and costly
to obtain and the Government therefore does not accept this recommendation.
- the number of households
that have an assessment, but do not take out a Green Deal Plan
(Paragraph 40);
DECC already publishes Official Statistics on the
number of households that have an assessment and the number of
households that take out a Green Deal Plan, so this information
is available. The data does require careful consideration. I have
cautioned above that Green Deal Plans are far from the only option
after an assessment. It is also necessary to take into account
the likelihood of time lags between assessments being undertaken
and installations being put in place. Some householders, for instance,
may want to wait for other improvement works they are having done.
On 25th June my Department published research on consumers'
actions and intentions after having had a Green Deal Assessment.
The research is available here:
https://www.gov.uk/government/publications/green-deal-assessment-survey-summary-report
- estimated carbon savings
per year from all Green Deal and ECO installations (Paragraph
47);
We intend to publish Official Statistics on the estimated
carbon savings per year from all Green Deal and ECO installations
from September 2013 onwards and therefore accept this recommendation.
- measured carbon savings
per year from Green Deal and ECO installations (Paragraph
47);
We refer the Committee to my response on this on
page 6. Estimated Carbon Savings from Green Deal and ECO installations
will be assessed in the longer term using the National Energy
Efficiency Database (NEED) to give an indication of actual carbon
savings.
- the total expected lifetime
bill savings for all Green Deals (£)(Paragraph
49);
- average measured annual bill savings for
Green Deals undertaken each year (£)(Paragraph
49);
We can accept these recommendations but will need
to make a proxy from actual carbon savings using data from the
NEED database.
- the average interest
rate charged on Green Deal finance per year (Paragraph
52);
Interest rates for Green Deal Plans are variable
and will depend on a number of factors, ranging from type of measure
installed to loan term. Neither the Green Deal Finance Company's
rates, nor those of Providers, are set by Government and publishing
average interest rates could mislead and confuse consumers who
may expect to get those rates. Therefore we do not intend to
accept this recommendation.
- the average cost of a
Green Deal assessment (Paragraph
52);
We cannot accept this recommendation. The Government
does not hold information on the average cost of a Green Deal
assessment and considers that obtaining this information would
not be cost effective or necessarily beneficial to consumers.
This is because there are a number of offers in the market which
include plans where cost is off-set against work if works are
carried out. This means that any information made available could
be misleading.
- the proportion of Green
Deal plans that incorporate the assessment charge versus those
where it is paid up front (Paragraph
52);
We do not hold this information and therefore cannot
accept this recommendation.
- the number of early repayments
of Green Deal finance (Paragraph
52);
We accept the Committee's recommendation to make
this information available and will do so in the quarterly Official
Statistics series.
- the total cost of ECO
to consumers per year (Paragraph
54);
We can accept the Committee's recommendation to make
this information available, as far as possible, and will provide
information on the costs of ECO delivery, but have to make the
caveat that the data will be provided by energy suppliers and
Government may not be able to fully verify it. It may be particularly
difficult to gauge the manner in which costs are passed through
to consumer bills, not least as different companies may adopt
different practices.
- the proportion of ECO
installations that have Green Deal co-financing (Paragraph
54);
We intend to publish Official Statistics covering
this information.
- the proportion of ECO
installations with no other form of co-funding (Paragraph
54);
We can only partially accept this recommendation
as we do not hold robust data on whether any self-financing has
been contributed and would need to obtain this through periodic
surveys.
- the number of households
per year that have been refused a Green Deal loan (Paragraph
58);
We expect to make this information available on a
six monthly basis. There will be constraints in terms of accessing
the full data, for example refusal at the point of contacting
a Green Deal Provider. It should be noted that the data available
may include cancelled loans in addition to refused loans.
- the number of households
taking out a Green Deal plan broken down by socio-economic classification,
income decile, tenure, property type, geographical region and
urbanity/rurality (Paragraph
58);
We accept this recommendation. We will hold much
of the data on this but we will need to undertake proxy analyses
on location to determine socio-economic classification and urbanity/rurality.
We intend to make this information available through our quarterly
Official Statistics series.
- the number of homes receiving
ECO funding under each of the three strands of the scheme (Paragraph
60);
DECC already publishes Official Statistics on the
number of homes receiving ECO funding and will break this down
by obligation in future releases. Provisional figures, which
are subject to further checks by Ofgem, show there were 81,798
measures installed under ECO up to the end of April. Over 70,000
properties benefitted from one or more ECO measures being installed.
- a breakdown of the households
receiving ECO carbon saving funding by income decile (Paragraph
60);
We do not hold this data but will be able to undertake
proxy analyses on location to determine socio-economic classification.
- the number of complaints
to the Ombudsman per month (Paragraph
66);
We accept this recommendation and will publish figures
in due course.
- the number of compensatory
financial awards required by the Ombudsman per month (Paragraph
66);
We accept this recommendation and will publish figures
in due course.
- the number of disconnections
related to a Green Deal charge per year (Paragraph
68);
We accept this recommendation. However, we won't
be able to determine whether disconnection is due to failure to
pay Green Deal charge or any other element of the fuel bill.
- the number of accredited
assessors and installers and the number of each working in the
SME sector (Paragraph
71)
We recommend that this information should be
collected and published by DECC.
We accept the recommendation regarding the number
of accredited assessors and installers. However, the Government
does not hold information on the number of assessors and installers
working in the SME sector and will be dependent on surveys. We
expect the Green Deal Oversight and Registration Body to publish
information on this shortly.
Conclusion
This memorandum forms the Government's response to
the recommendations set out in the Committee's report Green
Deal: A Watching Brief. The Government has and will continue
to regularly publish information on progress of the Green Deal,
keeping the Committee and other stakeholders informed.
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