Buildings Green Deal housing scheme

Published on February 27th, 2013 | by Chris Milton


“Crazy” Legal Action Threatens Green Deal Scheme

February 27th, 2013 by  

The UK’s groundbreaking £600 million Green Deal scheme is under threat after the European Union confirmed it would mount a legal action against it.

However, the decision to challenge the Green Deal scheme in the courts has been branded as “crazy,” with politicians and business leaders from across the EU condemning the decision.

Green Deal housing schemeAt the heart of the dispute is the UK’s long-standing commitment to charging a reduced rate of sales tax on energy-efficient materials used in the construction industry. Most items in the UK attract a sales tax rate of 20%, but the Green Deal, unveiled in October 2012, said that a reduced rate of 5% would be chargeable for energy-efficient building materials.

However, the EU says that this is against its rules, which allow a reduced rate of sales tax for social schemes but not for environmental ones. It also claims that a 75% reduction in the sales tax charged is not the best way to promote the use of energy-efficient goods.

The Green Deal scheme was brought into effect by the Energy Act 2011. This allows landlords and homeowners to make environmentally friendly modifications to their properties without paying upfront costs.

Instead, Greed Deal providers, including traditional finance companies, would meet the initial cost and the landlord or homeowner would repay the debt through savings on their electricity bills.

Several energy efficiency schemes, such as micro generation, already attract a 5% sales tax in the UK. One of the reasons for expanding the scheme to general energy-efficient building materials was to ensure the repayments to Green Deal providers would remain below the savings made.

The EU has long accepted homemade renewable energy in Britain as a social benefit, which is expected to be a key part of the UK’s defence against the legal action, as is the observation that other countries (including France) also have a reduced 5% sales tax on green building renovation.

Image Credit: My neighbourhood (some rights reserved)

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About the Author

is a seasoned sustainability journalist focusing on business, finance and clean technology. His writing's been carried by a number of highly respected publishers, including The Guardian, The Washington Post and Scientific American. You can follow him on twitter as @britesprite, where he's one of Mashable's top green tweeters and Fast Company's CSR thought leaders. Alternatively you can follow him to the shops... but that would be boring.

  • From whence springs this plague of petty rule-making bureaucrats who think that their life purpose is to tell others what they cannot and can do, when people individually have freedoms that are being trampled at a furious rate? The story above is a classic example of lose-lose. More people lose their freedom to be individuals and more people make more rules from the comfort of chairs in swank offices, instead of helping fellow humans by planting yam gardens in the highlands of starving New Guinea or doing similar, practical humanitarian acts.
    I’m retired now, but when my children were pre-school in particular, I was often away for weeks at a time doing humanitarian acts. Such separations were hard, though they might seem short.
    I have a relation aged 74 who travels the world, largely at his expense, teaching teachers in remote places how to better educate children at their schools. Some parents have walked for several days to bring their children to his classes, which are under non-Government, non-religious, non-political endorsement and assistance-in-kind.
    It is hard to find good feelings for the office-bound pettyfoggers.

  • sean

    social action – reduces energy closed

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