Green Deal (Consumer Protection)

– in the Scottish Parliament on 6th June 2017.

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Photo of Christine Grahame Christine Grahame Scottish National Party

The next item of business is a members’ business debate on motion S5M-05081, in the name of Ivan McKee, on “UK Green Deal, Supporting Aggrieved Householders”. The debate will be concluded without any question being put.

Motion debated,

That the Parliament acknowledges that the UK Government’s Green Deal scheme was intended to help households reduce their energy bills; understands that the public engaged with this initiative, confident that, in using contractors from the UK Department of Energy and Climate Change’s approved list of installers, they would be guaranteed good quality work; believes that much of the work was substandard and of no economic or environmental benefit to consumers; further believes that industry-backed guarantees have proven to be worth very little; notes the view that the UK Government needs to strengthen its consumer protection processes, and further notes calls for it to compensate the affected householders in Glasgow Provan and other parts of north east Glasgow, Rutherglen and across Scotland.

Photo of Ivan McKee Ivan McKee Scottish National Party

A key role of elected members of this Parliament is to pursue issues that have significantly impacted on our constituents, to gain redress for injustices caused and to work to prevent a repeat of those issues. The green deal is one such issue.

The United Kingdom Government’s green deal scheme is a tale of good intentions gone badly wrong. An initiative by the UK Department of Energy and Climate Change aimed to make millions of homes and businesses across the UK more energy efficient by installing new green technology with little or no up-front cost to householders. New financing frameworks were created to enable improvements to the energy efficiency of households and non-domestic properties, either through a charge on future energy bills or by allowing the householder to claim back up-front costs that they had paid out, through a cashback voucher that was paid by the Energy Saving Trust on satisfactory completion of the work.

The green deal should have saved householders money and it should have saved the environment in terms of energy use and emissions. It should have been a win-win, but something went very badly wrong.

Concerns over the green deal scheme emerged from apparently individual and disparate instances of constituency casework coming into my office and the offices of Anne McLaughlin MP and MSPs around the country, including Clare Haughey MSP in Rutherglen. Individual householders began approaching us seeking help regarding external wall insulation and solar panels that they had had fitted to their properties. Quickly, a trend emerged and it became clear that the issue reached beyond our constituencies and across Scotland. We do not yet know the full extent of green deal mis-selling and I hope that this debate will encourage others to come forward.

Through the nature of the cases, which involved shoddy workmanship and mis-selling of inappropriate products, we quickly discerned a pattern and became aware that people had fallen victim to unscrupulous companies that saw a financial bonanza facilitated by the lack of oversight of the green deal. Often the companies were owned by individuals with a history of mis-selling, who left a trail of liquidated businesses in their wake.

The scheme was ineptly regulated from the outset. Official green deal assessors—the individuals approved to advise householders on the work that they needed to have done—were required to undergo only a two-day course before they were let loose on households. That lack of oversight attracted unscrupulous salesmen who were authorised to advise householders to sign contracts worth tens of thousands of pounds.

Green deal contractors had to be authorised and were listed on the Department of Energy and Climate Change website. The approval of contractors for this type of energy efficiency work was the responsibility of the UK Government. Although the Scottish Government was charged with the roll-out of the green deal in Scotland, it had no opportunity to influence who was approved, and it seems that the UK Government was not too fussy about who got on the list.

The problem is encapsulated by the unfortunate experience of an elderly constituent of mine. Mary, who is from Barmulloch in Glasgow, spent her life savings on the green deal to provide a legacy for her family: as she saw it, a better, greener environment and an investment in her grandchildren’s future. She had been doorstepped by unscrupulous green deal providers, who she trusted because they had been approved by the UK Government. However, their fast-buck approach and failure to comply with proper procedures meant that Mary found out that her home improvements were not of a sufficient standard to attract a building warrant—a requirement of the council that should have been a formality if work had been done properly.

Many had been assured that building warrants were not needed, or that they had been applied for. In many cases, they had not, and my team has been working with Glasgow City Council to find a solution. In worst-case scenarios, some home owners have had to have work completely redone at great cost to themselves.

Mary’s home is now in limbo. It is uninsurable, unsellable and, for all she knows, unsafe. Every month her energy bills incur a surcharge for so-called home improvements that have not been done to standard. As we can imagine, she cannot sleep at night. Many of Mary’s neighbours and others like them find themselves in similar situations. The different and unusual means of financing the scheme, and the requirement for involvement from a chain of third-party organisations, each of which needs to be satisfied that things are in order before it signs off on the deal, has led to unimaginable complexities. None of that helps Mary and others who are in her position.

I have worked with the local MP, Anne McLaughlin, my colleague Rutherglen MSP Clare Haughey and Margaret Ferrier MP, and we have taken steps to help where we can. We have raised awareness of the issues and encouraged householders to come forward by hosting several public meetings, as well as upwards of 50 one-to-one discussions with affected individuals, to understand their individual circumstances and provide support.

We have been in correspondence with the Scottish Government’s Minister for Local Government and Housing, initially to alert his office to the issues. Together, and with some small measure of success, we have managed to ensure that some constituents who signed up to financial deals have been recompensed. However, it has become obvious that that has happened only because of the good will of some of the financiers. Many of the so-called guarantors associated with the scheme have bluntly refused to acknowledge people’s concerns and have curtly dismissed the mis-selling of services by saying, “Buyer beware”.

We have met Glasgow City Council to try to sort out what work will need to be done to enable properties to fulfil the requirements for building warrants. There is a need to look at the building standards system that is administered and enforced by Scottish local authorities, to ensure that it truly protects the public interest by monitoring and improving building regulations and stock. At the moment, the system is variable, which leads to confusion in the building industry and public.

I am calling for better guidance on how local authorities work with trade bodies and the public to ensure that the decision-making process is transparent, inclusive and fair to those who have been most affected by the regulations—the individual home owners.

We have also secured tonight’s debate in Parliament, to further raise awareness of the issues as we work to secure some resolution. I welcome many of my affected constituents, who have come to the Parliament’s public gallery to hear the debate.

I am proud to work with other members of the Parliament on this matter, and I thank the many members across the parties who signed my motion. It is one of the best examples of Parliament working together. However, we believe that the source of the problem—the UK Government—must be held responsible first and foremost for fully compensating householders for the inspection and remedial work they need to have undertaken to get their homes back to standard. It needs to strengthen the processes that it uses to authorise contractors on this and any future programmes, including provisions to guard against so-called phoenix companies—new contractors with the same owners as green deal companies that have gone bust—re-emerging and targeting the same individuals who they conned previously.

The green deal mis-selling scandal has severely affected many of my constituents and others across Scotland. It is a state of affairs that should not have happened if those responsible had done their jobs. Although I and my parliamentary colleagues have had some limited success so far, there is much work to be done to gain recompense for those affected and to ensure that such a state of affairs can never happen again.

The Deputy Presiding Officer:

I appreciate why those who are in the public gallery wish to applaud, but I ask you to desist as we do not permit it in the public area.

Photo of Alexander Burnett Alexander Burnett Conservative

I point members towards my entry in the register of members’ interests, especially in relation to the renewables and construction sectors.

I congratulate Ivan McKee on bringing this members’ business debate to the chamber. It is a great opportunity to speak about the green deal.

The deal was set up with the best intentions at its heart. It aimed to help consumers to save money and increase energy efficiency throughout their homes—something that we should all continue to aspire to. Strict processes were in place for regulating the green deal, but I am aware of complaints about some operators, particularly Home Energy and Lifestyle Management, who were charged with malpractice and have since gone into administration.

It is right that the secretary of state took the necessary action to protect future consumers of companies that trade at a level that is not deemed appropriate. It was welcome that, in November 2015, HELM was swiftly sanctioned for breaches of the green deal code of practice.

Photo of Clare Haughey Clare Haughey Scottish National Party

I am reassured to hear that the UK Government is going to do something for consumers who in future use the green deal to invest in improvements to their houses. Can the member enlighten us as to what the UK Government will do for my constituents, and the constituents to whom Mr McKee referred, who have already suffered under the green deal?

Photo of Alexander Burnett Alexander Burnett Conservative

I will cover those points in my next paragraph.

It is important to note that the framework that was established by DECC was sufficient to bring about action on HELM. It is also right that the green deal ombudsman remains active and intervenes where malpractice has occurred. The ombudsman has significant powers to investigate complaints and can require energy companies to remove charges or provide a service. Furthermore, on the issue that Clare Haughey asked about, the ombudsman can award compensation of up to £25,000. Even if a green deal provider has gone into liquidation, consumers who entered into green deal plans will continue to be covered by the green deal framework, which means that the plan repayments can continue undisrupted.

If there are problems with the green deal finance contract, the Financial Ombudsman Service also has a role to play. Similarly, if a service has been misdescribed, trading standards can get involved, and specific energy companies can be reported to Ofgem, the Office of Gas and Electricity Markets. It is right that the law provides protection to consumers on areas such as faulty goods, poor service, problems with builders and rogue traders. Where malpractice has occurred, I urge that all available avenues are used to protect consumers to the highest level.

Although the motion is on a specific case, it raises the much wider problem of how we tackle energy efficiency. As members will be aware, heat accounts for 50 per cent of all energy consumption in Scotland, so we simply cannot meet our climate change targets without facing the problem directly, which is why the Scottish Conservatives remain committed to energy efficiency measures. Given that 57 per cent of Scottish dwellings are in energy performance band D or worse, it is right that we should aspire for all homes to reach band C or better by the end of the next decade.

I would like spending on energy efficiency to reach 10 per cent of the capital budget by the end of this parliamentary term, which would be a cumulative figure of £1 billion, in contrast to the £500 million that the Scottish Government has pledged. That would help with more than just Scotland’s climate change targets. Nearly a third of all Scottish households live in fuel poverty. That means that 748,000 households pay more than 10 per cent of their income merely to keep themselves warm, which is unsustainable. There is a huge amount of work to be done to cut emissions while helping to keep bills down, and I urge that we grasp that opportunity urgently. Thank you.

The Deputy Presiding Officer:

I let you continue, Mr Burnett, but I have been reading the motion, which is on a very specific point about the green deal and mis-selling. Just bear that in mind for another occasion. The Presiding Officers’ approach is a little more liberal during members’ business debates, but be careful next time.

Photo of Clare Haughey Clare Haughey Scottish National Party

I, too, thank Ivan McKee for lodging the motion. I welcome the constituents who are in the public gallery, and I know that many are watching us at home.

The problems with the UK Government’s green deal scheme were not confined to one area of the country nor, as we have heard, were they confined to home improvements, cladding, boilers and insulation. In my constituency of Rutherglen, solar panels were widely sold to householders in Blantyre. People were told that they would not pay any more for their electricity, that they could save money and that they were helping the environment. So far, 60 individuals have attended a series of public meetings that I have organised in conjunction with the local citizens advice bureau. Attendance at those meetings quickly expanded to include disillusioned solar panel customers from Hamilton and other areas. Time after time, we have heard stories of high-pressure sales techniques and salespeople insisting on documents being signed at tea-time doorstep calls. There was a 14-day cooling off period, which is absolutely right, but we have heard about work commencing on day 15.

Feed-in tariffs—the money that householders were owed for generating electricity—were signed over to a third party with little if any explanation to the purchasers. Solar panels were fitted to roofs in Blantyre, which is not exactly the Costa del Sol, and householders will have to repay the cost of the panels for the next 25 years through their electricity bills. I have seen one contract that specifically states that the feed-in tariffs pay for the panels. However, many people have not only signed over their feed-in tariff, but are paying for their panels again through a finance deal.

Solar panels were also fitted to houses where the electricity meter was not compatible with the installed system. In fact, the meters were charging the householders not only for the energy that they used but for the energy that they produced. That has resulted in huge energy bills and huge debts for people—adding to the fuel poverty that Mr Burnett mentioned—when the people involved expected to reduce their bills, not double them.

Worryingly, the debt for the solar panels rests with the property, not the individual householder. That has led to householders being unable to sell their properties. Few companies will mortgage or remortgage those properties, and I have been told of house sales falling through because lawyers advised buyers not to continue with a purchase. One of my constituents recently lost several thousands of pounds when one buyer withdrew their offer to buy her house after she had put down a deposit on another property.

Solar panel deals were mis-sold to customers who were told that the deals were guaranteed by the Scottish Government. That was untrue. Solar panels were a green deal product promoted by the UK Government. That is the type of misinformation used by HELM, which has, unfortunately, been in administration since April 2016. I say “unfortunately” because customers have been left without resolution while the Financial Ombudsman Service determines where liability lies.

Following our meetings in Blantyre, Margaret Ferrier—the former MP for Rutherglen and Hamilton West—and I have been working to get fair compensation for the issues that many customers in our constituencies experienced. In doing so, we have worked closely with the offices of Ivan McKee MSP and Anne McLaughlin, the former MP for Glasgow North East, and we are grateful for their support and co-operation. However, I suspect that the situation in Blantyre and the east end of Glasgow is just the tip of the iceberg, as tens of thousands of such deals were sold across Scotland and the UK before the scheme was halted. The more that we learn about the issue, the more we come to realise that potentially hundreds, if not thousands, of people are affected.

I met Angela Constance, the Cabinet Secretary for Communities, Social Security and Equalities, in February and I thank her and her officials for undertaking to continue pressing the UK Government department responsible for a resolution to the issue, which continues to leave so many Scottish customers out of pocket. The situation is causing real financial hardship to many customers who fell foul of HELM’s practices and other companies’ abuses of the green deal. We should do everything that we can to help them get the resolution that they deserve.

Photo of Mr Mark Ruskell Mr Mark Ruskell Green

I thank Ivan McKee for introducing the debate.

They say that there are few things more stressful in life than moving house but, having spoken with a number of constituents who have had a bad experience with the green deal, it seems to me that a botched house renovation can take the stress up to an entirely new level and, in some cases, make it impossible for people to sell their houses.

Through the green deal, solar panels and wall insulation have been incorrectly sold to consumers as being Government backed, with many consumers signing up through doorstep sales. The UK Government does not back the costs of equipment failure, so people have been repaying loans for equipment that does not work with no recourse to the Government for support. Many home owners have been unable to pay for remedial works, particularly those associated with inappropriate cavity wall insulation. As we have already heard, many householders who are affected by the matter have been unable to get building warrants as a result, which has put them in incredible difficulties when it comes to selling their houses.

I remember attending a major consultation event with energy efficiency organisations and DECC officials in London, 18 months before the green deal was launched. At that meeting, concerns were raised about not only the bureaucracy and the financial attractiveness of the emerging programme, but its quality, especially as it was conducted on a piecemeal, house-by-house, market-led approach.

The green deal was always a highly complex policy with a burgeoning architecture of organisations delivering assessment, training, installation and accreditation to support it. However, out of the 300,259 green deal assessments that were carried out, only 1,815 plans successfully went ahead. That is far short of the millions of homes that the Government claimed the scheme would help when it was first launched.

The interest rate on the loan to householders was also much higher than typical loans available on the high street, and was wholly unattractive for householders. Therefore, it was not much of a deal and it turned out to be hardly green at all. In April 2016, the National Audit Office reported that the scheme had not achieved value for money—it cost taxpayers £240 million—and was not generating any additional energy savings, either, which is hardly surprising, given the success rate. All of these concerns were raised at the Westminster meeting that I attended in 2011, but there was a failure to address those concerns at that point or during the roll-out of the scheme in 2013.

We need to learn the lessons of the green deal. I believe that the answer lies in more area-based approaches to energy efficiency that can deliver at scale and also deliver better quality. For example, Germany’s EnEV programme, which began in 2002, has been hugely successful. Under the scheme, householders could get a loan of up to €50,000 from a public bank to replace a home’s heating and domestic hot water systems. The interest on the loan was much lower than that of the green deal. The programme had a clear goal to refurbish the entire housing stock and public buildings in Germany by 2030. So far, 1 million old homes have been retrofitted, which compares well with the 1,815 homes that have been assisted by the green deal. Further, those retrofits were carried out to a high standard—they were a deep retrofit, rather than just something that tackled the low-hanging fruit of upgrading boilers and wall insulation.

It is clear that what works are programmes with a clear focus on an ambitious target that is driven by the public sector and which deliver quality at scale on an area-by-area basis. Alongside legislation to deliver better common repairs and a focus on energy efficiency standards in the rented sector, we have the opportunity to learn from the mistakes of the past and deliver warmer, more affordable homes across Scotland.

Photo of John Scott John Scott Conservative

I thank Ivan McKee for bringing this important issue to the chamber this evening, and I congratulate him on securing a debate on his motion.

Commentators often say that we face three challenges when devising energy policy—a trilemma, if you will. First, we need to minimise carbon emissions so that we can stop the worst effects of climate change for future generations. Secondly, we need to ensure security of supply, so that we can keep the lights on not just in five years, but in 10 or 20 years. Thirdly, we need to protect consumers by keeping energy bills as low as possible and by ensuring that they receive a good standard of service.

Striking the right balance between those strands is one of the great challenges for those who formulate policy, and it is exactly what the green deal set out to achieve when it was launched in 2013—a noble aim, for which we all still strive. However, for a variety of reasons the policy was not delivering value for money and was discontinued, which was a difficult but necessary decision. The vast majority of companies that were implementing the green deal provided a high standard of service, and a strict code of practice has remained in place to safeguard consumers.

However, there were instances of companies not meeting the high standards that were demanded. The case of Home Energy & Lifestyle Management was a particularly high-profile example of misleading information being provided, so it was right that HELM was swiftly fined by the Secretary of State for Business, Energy and Industrial Strategy. I condemn any company that sought to mis-sell policies or to mislead consumers, particularly through cold calling, which the UK Government has strongly clamped down on.

I am aware that, in some cases, consumers continue to feel let down or aggrieved by the service that has been provided, which is why the green deal ombudsman continues to operate, investigate and intervene on complaints. It can require companies to waive charges and provide up to £25,000 in compensation. I also know that Ofgem, the Financial Ombudsman Service and trading standards services have been, and continue to be, involved in aspects of green deal cases.

We have a strong history of consumer protection in this country, whether it involves guarding against shoddy service and poor quality goods, encouraging competition so that consumers can choose the best deals available or improving product safety. I want to continue to see a framework that is fair and which works for all consumers, which is why consumer protection guidance and standards should be kept under constant review and any gaps plugged.

In a world of rapid and sometimes bewildering technological advancement, which provides new opportunities but also unforeseen challenges, it is especially important that regulations keep up. Although the green deal has ended, our commitment to energy efficiency and to driving down costs and emissions remains.

My colleague Alexander Burnett highlighted that fuel poverty remains stubbornly high, and set out some important proposals to improve energy efficiency. Getting that right would be a win for consumers, the economy and the environment. Driving down demand would also ensure that less energy has to be generated in the first place. To do so means, in part, encouraging use of more energy-efficient appliances—in particular, white goods. It also means changing consumer behaviour, which is why I welcome the roll-out of smart meters across the country and the UK Government’s commitment to ensure that one is offered to every home and small business by 2020.

Nobody should ever get a raw deal when they are trying to improve their home and save money. We should, while continuing to support innovative solutions to our energy needs, be resolute in holding to account those who mislead or provide a poor service.

The Deputy Presiding Officer:

Thank you, Mr Scott. You squeaked that into being wholly relevant with some of your variations on the theme. I am drawing your attention to the fact that it is a very tightly drawn motion.

Photo of Kevin Stewart Kevin Stewart Scottish National Party

I thank Ivan McKee, Clare Haughey, Anne McLaughlin and others for highlighting the mis-selling of the green deal. I am grateful to Ivan McKee for raising this troubling matter, which has seen many of our constituents being badly let down by what has turned out to be seriously inadequate consumer protection and safeguards in the UK Government’s green deal scheme.

I am very troubled by the apparent inability of the UK Government to show leadership and to take swift and effective action on the issue. The scheme was designed to implement thousands of measures across Great Britain to reduce energy bills and improve energy efficiency, but it has left too many people with increased bills or installations that, in some cases, are so defective that they cannot get a building warrant, which means, as we have heard from other speakers, that they might not be able to sell their properties. Those problems have been highlighted to the UK Government on numerous occasions.

The problems are not just anecdotal. We have heard from across the chamber how individuals have suffered, and a National Audit Office report in April 2016 was highly critical of the performance of the scheme, which achieved only a fraction of the number of energy efficiency installations that had been predicted by the UK Government.

In response to a combination of poor take-up and concerns about industry standards, the UK Government announced in July 2015 that it would no longer fund the scheme administrator, the Green Deal Finance Company, which effectively closed the scheme. Although that move has prevented further mishaps from occurring, there is still much to be done to help those who, in good faith, signed up to the scheme but who now find themselves in difficulties. It is all fair and well for Mr Burnett to say that the secretary of state has put everything in place to protect consumers in the future, but what about the people such as those in the gallery? What about people like the lady from Barmulloch whom Mr McKee spoke about? What action are they going to get from the UK Government to put right a failure that rests fully with the UK Government and its defective scheme?

I assure Parliament that the Scottish Government will continue to do whatever we can to help to obtain a satisfactory resolution for the people concerned. Despite not having responsibility for the UK green deal, the Scottish Government has made every effort to advise and assist people—often vulnerable individuals—who have been affected by the poor practices of some who have been involved in the scheme.

Over the past few years, the Scottish Government has made a number of requests for the UK Government to strengthen its consumer protection processes. We have written to both the current and the previous secretary of state with responsibility for energy efficiency to express how the green deal framework has failed to deliver any meaningful redress to those who have been impacted, and we have urged that the matter be prioritised and resolved.

We have also called on bodies that have an active interest in the issue, including the Green Deal Finance Company and the Financial Ombudsman Service, to put in place proper redress systems, and we have convened a UK-wide enforcement group to highlight the issues that Scottish consumers face.

When it became apparent that building warrants could not be obtained and that our own cashback scheme vouchers could not be redeemed by people who had been unfortunate enough to have their external wall insulation measures poorly installed by UK Government-approved contractors, we quickly instructed the Energy Saving Trust to make contact with all the individuals concerned to provide guidance and support. I am aware that the EST has managed to resolve the situation for some people, and is continuing to provide on-going support to others. I urge all members who find that they have constituents in that situation to tell them to contact the Energy Saving Trust if they have yet to do so, so that they, too, can be helped through the complex and distressing situation.

Although we will continue to help and support people who are in need—I know that there are many members in the chamber, including Mr McKee and Ms Haughey, who are providing direct support to their constituents—the truth is that we need the UK Government to act and to resolve the situation, and to ensure that it never happens again. My officials have been told that the UK Government’s Department for Business, Energy and Industrial Strategy, the green deal and the Financial Ombudsman Service along with the Green Deal Finance Company have been working to achieve just that. I sincerely hope that that is the case and that there will be satisfactory outcomes for those concerned. However, the current UK Government’s track record in the area is not great, so it is right that we collectively push it to take action.

I therefore have no hesitation whatsoever in supporting Mr McKee’s motion, which calls on the UK Government

“to strengthen its consumer protection processes” and to ensure that it adequately compensates all affected households across Scotland. The UK Government, no matter who that is after this Thursday, owes that to Mary from Barmulloch and the many others who have suffered because of the defective scheme.

Meeting closed at 17:37.