Green Deal interest rates competitive says Energy Secretary

Energy and Climate Change Secretary Ed Davey has rejected claims that interest rates on loans taken out under the Green Deal are excessively high.

The scheme enables homeowners to take out loans to pay for energy saving improvements such as cavity wall insulation and double glazing. The loans are subject to interest rates of approximately 7 per cent. Mr Davey believes this is a fair rate to pay for long-term loans that are affixed to properties, not people.

The Climate Change Minister said: “I won’t concede that loan costs are too high. You have to compare it with unsecured loans and not mortgages. This is a great deal”.

Responding to criticism of the complexity and commercial appeal of the Green Deal, Mr Davey added that he never expected a rush of applications during the scheme’s infancy. Declining to state exactly how many households have applied for finance under the Green Deal, Mr Davey noted that comprehensive statistics would be available in the near future.

Mr Davey said: “Our plan is to issue monthly reports starting this spring. There is already a good pipeline of work, good signs of momentum. Assessors are there in big numbers and increasing all the time”.

Capita Symonds director, Richard McCarthy, believes the Green Deal is hard to understand and offers little value for money.

Speaking to the Guardian, Mr McCarthy commented: “Perception is all. Not enough people truly understand what the Green Deal is about and don’t see the incentive”.

The former civil servant added: “The relative cost of the loans is higher than most mortgages. People are challenged by the numbers. It adds fuel to their fears of taking up more debt. “More credit checks are occurring. You can understand, but [one might argue] that this will make it harder for some householders to access finance. There is more room to be flexible and to bring costs down”.

Regardless of whether the Green Deal can provide homeowners with a reasonable return on their investment, questions are already being asked of its fitness for purpose. If relatively few households apply for loans under the scheme, the government’s flagship environmental policy will fail to achieve its aim of reducing Britain’s residential carbon footprint.

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