The Green Deal pay-as-you-save scheme has failed to drive the scale of energy saving home improvements needed to cut carbon emissions and insulate consumers from high energy bills, an MPs committee has concluded.

A report published by the Energy and Climate Change Committee said the Government should now consider new incentives to encourage energy efficiency.

Tim Yeo MP, Chair of the Energy & Climate Change Select Committee said: “Stamp duty discounts and variable council tax rates could be used to broaden the appeal of energy efficiency improvements and make them even more of a money saver for households. Extra incentives certainly need to be considered, as the Government’s flagship pay-as-you-save finance scheme, the Green Deal, has only delivered a fraction of the expected benefits so far.”

A combination of financial, communication and behavioural barriers has meant that the Green Deal has been slow to attract customers. Green Deal finance is, in principle, an attractive proposition, but the high interest rates attached to the loan, were putting off potential customers as many households are able to find cheaper finance mechanisms elsewhere. DECC’s communication strategy has been confusing and has often conflated different energy efficiency schemes. As a result, the Government has struggled to drum up support even amongst those households that could benefit most from a Green Deal loan.

Tim Yeo added: “The interest rates attached to the Green Deal are simply not financially attractive enough for many households to go to the hassle of setting one up. By its nature this kind of scheme also only appeals to a certain section of the population who are in a position to take out loans on home improvements. Broader incentives could encourage lots more households to take simpler and cheaper steps to improve the energy efficiency of their properties and save money on their energy bills. Insulating our homes to make them warmer will bring benefits both for homeowners and for society, as we enhance our energy security and lower our carbon emissions.”

The MPs are supportive of the principle of the Green Deal but believe the Government needs to set out a clear strategy to revive the scheme and make it both clearer and more appealing to UK households. Alternative financial incentives, and other measures and regulations, should now be considered in tandem with the Green Deal to encourage energy efficiency across wider sections of society.

Richard Lambert, chief executive officer at the National Landlord Association (NLA), has welcomed the report and said: “This report neatly encapsulates all the difficulties and issues we have encountered in trying to support landlords in improving the energy efficiency of their properties using the Green Deal.

“With the General Election in sight, we have to accept that the Green Deal is no longer as high on the list of priorities as it was. Nevertheless, Ministers should use the Committee’s recommendations as the blueprint to reinvigorating a flagship policy that has frankly so far failed landlords, the industry and the millions of tenants across the UK who rely on its implementation to improve their quality of life.”