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Energy efficiency incentives urged

Households should be offered incentives such as stamp duty or council tax discounts for boosting energy efficiency, MPs have suggested.

New incentives should be considered as the Government's flagship "green deal" scheme to encourage households to become more energy efficient has been a "disappointing failure" in its first 18 months, the Energy and Climate Change Committee said.

A report by the committee said the green deal, in which providers meet the upfront costs of installing efficiency measures and householders pay the money back from savings they make on their energy bills, had only been taken up by 4,000 households.

The main issue with the scheme was cost, with households passing standard credit checks often able to get cheaper loans elsewhere, and it only applied to a certain section of the population in a position to take out loans for home improvements.

Frequent changes to the pay-as-you-save scheme and the "energy company obligation", which requires energy firms to pay for efficiency improvements at the homes of the poor and vulnerable, had also created uncertainty and insecurity, the report said.

Failure to plan a communications strategy for the green deal meant the Government had failed to drum up support even among households who could benefit from it.

While the MPs supported the principle of the green deal scheme they said the Government needed a clear strategy to revive it, and make it clearer and more appealing to UK households.

And there was a need to consider other incentives such as stamp duty discounts or variable council tax rates, along with other measures and regulations, to encourage energy efficiency across a wider section of society, the committee's report said.

Committee chairman Tim Yeo 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."

He 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."

The MPs said that g iven concerns over rising energy bills, fuel poverty, energy security and climate change, " renewed efforts to promote the green deal and energy efficiency must be a priority for the Government".

Energy and Climate Change Secretary Ed Davey said: "We share the committee's ambition to drive a step-change in home energy efficiency - helping to cut carbon emissions and control energy bills. Our target is to improve the energy efficiency of 1 million homes by March 2015 - and we're on track. £540 million has been committed and as of June we have improved over 750,000 homes."

John Alker, director of policy and communications at the UK Green Building Council, said: "This influential cross-party committee has now added its voice to a crescendo of industry and independent experts, who have long called for greater incentives to boost demand for energy efficiency and the green deal.

"Energy efficiency is too great an untapped opportunity for this message to fall on deaf ears once again.

"Government needs to treat energy efficiency as a national infrastructure priority, which means a long-term programme of incentives and support, enabling the private sector to get on and deliver lower bills for householders."

Energy and Climate Change Secretary Ed Davey said: "We share the committee's ambition to drive a step-change in home energy efficiency - helping to cut carbon emissions and control energy bills.

"Our target is to improve the energy efficiency of 1 million homes by March 2015 - and we're on track. £540 million has been committed and as of June we have improved over 750,000 homes."

The funding relates to a number of energy efficiency schemes including a cashback scheme for measures taken by households who have a green deal assessment and the ECO scheme to help vulnerable and hard-to-treat homes.

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