Long payback times and higher rates of interest mean that small firms will not see the benefits of green deal loans, according to the Federation of Small Businesses (FSB)
In its latest report on the impacts of environment and energy policy on small and medium-sized enterprises (SMEs), the FSB argues that SMEs applying for finance under the green deal may have to wait as long as 20 years before they see the cost benefits.
The green deal, which officially launched today (1 October), enables domestic and business energy users to pay for energy-efficiency measures, such as insulation and better heating controls, via a loan that is paid back through a levy on future energy bills.
The “golden rule” under which finance will be approved means that energy bills must be lower after the efficiency measures have been fitted, including repaying the loan. However, the FSB argues that commercial rates of interest and rising energy prices mean that cost saving will not be seen until the initial capital is paid back.
To counter this problem, the FSB calls on the government to use the green investment bank to ensure lower interest rates for businesses.
“The green deal is a good thing – small firms want to be greener and save money on their energy bills. Our fear is that the scheme's potential to help insulate small firms from future energy cost increases will be lost due to the unattractiveness of the scheme,” explained John Walker, national chair of the FSB.
“It is imperative to help small firms' cash-flow that the government look at how it can guarantee low rates of interest for small businesses.”
The FSB report also argues that the national rollout of smart-meters could help SMEs to improve their energy efficiency and cut costs, but that the government must ensure that firms have free access to the data they produce.
“Under the current proposals, small businesses could face paying to access their energy consumption data. This will seriously undermine the credibility of the programme as well as limit its potential economic and environmental benefits,” states the report.
“Small businesses should be able to obtain their energy-use data without charge … Smart meters in themselves do not save any energy – it is how the data is used that leads to savings.”
The FSB went on to warn the government that it risked prolonging the recession, if it did not take a more coordinated approach to implementing new environmental policies.
“On top of rising energy costs… rising waste costs and increasing regulation of how businesses use resources are all in the pipeline. This will hit small firms hard,” states the report.
The FSB argues in favour of exempting SMEs from the producer responsibility elements of the Waste Electrical and Electronic Directive and from carrier bag charges – which are already implemented in Wales and will be enforced in Northern Ireland from next year.
The government should also force local authorities to allow SMEs to have access to household waste and recycling centres – insulating small firms from the rising costs of landfill tax – and reduce the costs of REACH, the EU regulation on chemicals, to SMEs.
