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24th August 2015
Author: Ross Sturley is principal of Chart Lane, and a committee member for the Chartered Institute of marketing Construction Industry Group (CIMCIG).
So, the Green Deal is dead. Anyone familiar with some pieces I wrote in 2011 would now expect me to be carrying a giant “I told you so” flag around.
Minister Amber Rudd recently announced that “In light of low take-up …. there will be no further funding to the Green Deal Finance Company, in a move to protect taxpayers”.
The Government has finally killed an idea that was honest, earnest, and in essence a good thing, but which was royally messed up.
They’ve done the right thing of course. It would be a marketing impossibility to restore credibility to the Green Deal now. However, there has been a significant cost to UK Construction plc as firms have geared up to deliver Green Deal funded improvements, spending money, producing materials, and recruiting and training staff. This spending is now wasted – a good thing has become a very bad thing.
The Green Deal aimed to improve energy efficiency in existing housing stock. Since 75% of the buildings that will exist in 2050 are already here, improving old stuff is likely to have a much greater effect on energy consumption than making everything we build from now on zero carbon.
It was a simple idea – help people to make improvements to their homes by borrowing against future savings in energy bills - easy access to capital for Joe Homeowner, and an incentive to deploy it.
However, this gloriously simple idea was made complicated and difficult to make happen. In addition, the cash savings on energy bills were small, and the pay back periods seemingly unending.
So homeowners had to jump through hoops and endure two weeks of building works to earn the promise of £50 a month off bills in ten years’ time. Unsurprisingly, this led to a very low level of take up, and ultimately the demise of the scheme.
The Government announcement did say that they would “work with the building industry and consumer groups on a new value-for-money approach”. If this is any more than words, then I have some tips for those drafting the ideas.
The Green Deal was a marketing failure. It was a good concept badly executed and communicated.
Green Deal II must satisfy some identified market need or want. What might that need be? Is it the need to feel good about helping the nation live up to its carbon reduction commitment? Or is it the need to save a load of money on energy bills but still be able to live in a warm and draught free home?
In Germany saving the planet through recycling may be a social duty, but in the UK it’s the only way to last to the next fortnightly bin collection without the rubbish piling up around the tiny council provided wheelie bin. Brits will only adopt Green Deal II if it delivers big savings for them right now.
There are two ways to accomplish this, either by replacing the loan system with outright grants – gifting the improvements to the population – or by using the tax system. If energy is too cheap to let even a 50% saving on average household energy bill pay back a loan quickly, making it more expensive by either taxing consumption or production would change the equation. Or of course there could be discounts off property linked taxes like stamp duty or council tax for those taking the deal up, or a reduction or absence of VAT on home improvements.
All of this would help Green Deal II get attention, be interesting, and desirable, and inspire action – that is the AIDA marketing principle for you.
Then the action needs to be easy. To be adopted, Green Deal II must be easy to understand and to get involved in. The customers are real people with other things to do than fill out a million forms or read hundreds of pages of jargon. If we make it hard, they won’t have time to do it alongside the day job, the school run, mowing the lawn, arguing with the insurance company, and spending three hours on the phone every night talking to robots or overseas call centres about their mobile tariff. If it’s too much trouble for the return, it’ll fail. And we don’t want that again.
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