Oral Answers to Questions

Luciana Berger Excerpts

Thursday 1st December 2011 Commons Chamber

[Chris Huhne]

It is a very interesting idea and one that certainly merits further consideration. I am delighted to say that the Minister of State, Department of Energy and Climate Change, my hon. Friend the hon. Member for Bexhill and Battle (Gregory Barker), will be very happy to meet my hon. Friend to take that matter further.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

We have heard a lot about interest rates this week. Affordable interest rates for green deal finance will be crucial if consumers are to take up the green deal at the scale and level the Government anticipate. A report by E3G says that relying on commercial loans could mean interest rates as high as 8%, 9% or even 10%. Polling has found that only 7% of the British public and homeowners would be interested in taking up the green deal if interest rates were as high as that. Given that, what specifically are the Government doing to get green deal interest rates down?

[Chris Huhne]

We are working closely with a group of interested parties to provide a finance aggregator for the green deal, which is exciting and will bring forward finance that is substantially cheaper than that estimated by E3G. We will announce the details of the scheme when we have them.

[Luciana Berger]

I thank the Secretary of State for that answer. The aggregator to which he refers is the Green Deal Finance Company, which is working very hard to try to lower interest rates. It estimates that it will need hundreds of millions of pounds from the Green investment bank properly to fund the initial capitalisation of green deal loans and to act as the catalyst that the green deal market needs. Without such funding, interest rates will be higher than 10% and the green deal will, therefore, surely fail. A moment ago, the Secretary of State said that he envisaged that the Green investment bank would provide some support for the green deal and that it could play a very important role. Will he tell us definitively today whether the Green Deal Finance Company will receive that scale of funding from the Green investment bank?

[Chris Huhne]

Obviously, it is up to the Green investment bank board to make its decisions, but it is clear that it is interested in helping energy efficiency and ensuring that green deal finance gets off to a good start. Let me make it clear how this particular market is structured. Green deal receivables—please excuse me, Mr Speaker, for reverting to financial market jargon—are very similar to utility receivables. As soon as the market is established and we secure a couple of deals, the Green investment bank’s support will become important. The market will then be happy to finance this on terms similar to utility receivables. If it does that, we will be looking at substantially lower interest rates than the ones the hon. Lady has been citing.