Will the Green Deal help you stay warm for less?

The government has launched the Green Deal to help householders make their homes more energy efficient and cut the cost of heating bills.


The initiative allows people to improve their homes without having to fork out large sums of money upfront. Instead, householders fund the cost of energy-saving improvements such as a new boiler or loft and wall insulation by taking out a loan, with the repayments added to their energy bills over a period of between 10 to 25 years.

The idea is that savings made on energy bills as a result of the work will cover the monthly repayments. The scheme is open to all householders, whether they own their home, are a landlord, rent privately or are in social housing.

Ministers say the deal will “bring about a revolution in energy efficiency” and help thousands of people warm their homes for less. Lower energy bills will also help people in fuel poverty – those who spend more than 10% of their household income on energy.

Will the scheme work?

The 'golden rule' of the Green Deal means your loan repayments should never be greater than the money you save on energy.

However, doubts have emerged as to whether this will always be the case, especially as interest on loans will be charged at 6.9%. And even if it is, your total energy bills are unlikely to fall until you've paid off your loan in full – potentially 25 years later.

By that point, you may have decided to move house, which will mean you'll never reap the full benefits of the scheme. What's more, if you're selling, you'll need to find a buyer willing to take on the loan. If you do manage to find one, they may only be willing to buy your home providing they pay less for the property. 

Ed Matthews, head of fuel poverty campaign group Energy Bill Revolution, says the plan does not go far enough: "The Green Deal will not stop fuel poverty rocketing in the face of high gas prices," he said. "We call on the Prime Minister to use money from the Carbon Tax to super-insulate this country's homes. This will provide households with five times more subsidy to insulate their homes and not add a penny more to energy bills."

How to take part in the scheme

If you want to take part in the scheme, you'll need to have a property assessment carried out by an adviser - you can find a list of them here. The assessment will cost between £80 and £120.

After assessing your home, the adviser will recommend improvements and estimate how much you could save on your energy bills once these improvements are made.

You should then shop around and get quotes for the work from a number of Green Deal providers – you can find a list of them here.

Each provider will give you a quote which will include the interest on the loan. Rates are likely to vary but the official rate set by the government is a representative annual percentage rate (APR) of 6.9%.

Once you have chosen your provider and the work is complete, you then start to pay for the improvements through your energy bill.

If you get in early enough, you can also take advantage of the government's cashback scheme which will give you a voucher to put towards the cost of home improvements. Packages could be worth more than £1,000 but it is on a first-come, first-served basis. You can find out more here.

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Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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