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RICH PICKINGS FOR POOR IN GREEN NEW DEAL

26-01-2010

GND Proposition

Plans for an energy saving Green New Deal targeting inner city Birmingham were welcomed on The Stirrer yesterday – but we questioned whether it made sense to encourage people in some of the poorest wards to take out loans to get involved. Karen Leach, who was a consultant on the project, insists the question hasn’t been ignored.

It is good that The Stirrer is questioning the economic justice aspects of the Green New Deal scheme. As the consultants who developed these proposals, Localise WM and Encraft have also paid attention to this. Under the PAYS part of the scheme, part of the costs are covered by a grant element.

Customers will not have to pay back more than they should save in energy costs over a ten year period, and the estimates used for likely savings are extremely cautious to ensure that this is a low risk strategy for the householder.

Additionally the loan stays with the house: for those owning their homes, when the property is sold any remaining loan amount is repaid from the house sale price, but it is increasingly found that renewables increase property values which will offset this. For those renting (ie most of those on low incomes), the loan is the landlord's responsibility in any case.

The £12,000 figure is an assumption about the total cost of retrofit for a typical house.

While in energy efficiency terms it is best if the full level of works can be carried out, the project recognises that not everyone will be able to afford this, and not all houses will need all works.

There will therefore be detailed advice to owners about costs and savings and what they can afford, with access to independent financial advice including the possibility of equity loans in the property which only have to be paid back when the house is sold.

Most of those on the lowest incomes will still be eligible for Warm Front grants which will fund some energy improvements, and they will have individual schemes tailored to take these grants into account when considering what is appropriate for them.

While every effort has been made to consider the issue of affordability for individual owners, consideration also has to be given to affordability for the Council.

While we have attracted a wide range of funding from other national and EU sources to help fund the pilot stage and the programme takes full advantage of the forthcoming Feed In Tariffs for renewable energy generators, the Council will still have to find resources to run the proposed project in what will be a very difficult financial climate for the whole of the public sector.

So although the scheme is low risk, to deliver the same results for free is not feasible.

It is not possible for a scheme to 'catch all' circumstances and it maybe that there are a very few cases where payback is a problem, but we think currently the scheme minimises risk of this and careful attention will be paid to this issue throughout the pilot stage.

Savings would not be as anticipated if the householder did not reduce their energy usage - for example leaving the heating on full with the windows open; so thorough energy efficiency advice for householders has been built into the scheme.

Also needing to be considered is the high cost of heating, whether carefully used or not, to the city's poorest householders without the scheme. Heating energy prices are high and forecasts consistently suggest they can only rise.

Without insulation, renewables and advice delivered affordably and comprehensively, heating bills are and will increasingly be a major factor in poverty and debt.

There are other ways in which this scheme should help deliver economic justice in a way that distinguishes it from many other local authority schemes: the Birmingham Green New Deal emphasises the development of local supply chains - fitting, supplying and manufacturing - particularly through small local businesses and social enterprises with training schemes.

So there will be jobs created in local enterprise that meets local needs - good for redistribution and local economic empowerment.

Of course the proof of the pudding is in the eating, but at proposal stage we have every reason to hope this scheme will provide the opposite of a debt trap for those on low incomes.

It is not only The Stirrer that raises these issues as important: Cllr Tilsley and council officers have questioned us extensively about this as the GND proposals have been scrutinised.

Karen Leach is co-ordinator of Localise West Midlands

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