Green Deal Finance Company Issues Liquidation Warning
Green Deal Finance Company Issues Liquidation Warning Oct 14, 2014
The finance company that was established to administer Green Deal loans is having to consider voluntary liquidation after one of its main backers has confirmed it will not be making any more funds available.
The Green Deal Finance Company (GDFC) was set up with more than £240m of public money to issue loans as part of the Government’s flag ship energy saving scheme.
However, uptake of Green Deal loans has been significantly lower than forecasted and despite a recent increase in demand, one of the main financial backers ‘the Green Investment Bank’ has now said that it is no longer willing to provide a new round of funding to the company.
Accordingly the GDFC informed the Department of Energy and Climate Change (DECC) that a rescue package has to be put in place by mid October or it will have to consider voluntary liquidation.
Senior managers at the GDFC discussed the idea of closing the company at a recent board meeting after Chief Executive, Mark Bayley sent a letter out to all their investors.
The letter, which was supposed to be confidential, was picked up by the news portal Business Green, who reported that Bayley had expressed the need for more Government support to keep the company afloat:
"We advised that the GDFC could not continue without funding and that this funding could not come from any source other than government [either GIB or DECC]. We also suggested that DECC consider whether GDFC should be taken under government ownership.
"The Minister (Amber Rudd) confirmed that the government is committed to the Pay As You Save principle and it is committed to the GDFC and ensuring that it continues with its reputation intact. However, the Minister indicated that DECC is considering the full range of options for PAYS and the future of the GDFC, including its funding, and will need time to reach a final decision as to how best to proceed."
The GDFC is still in discussions with the Green Investment Bank and have explained that the announcement to investors was just a proportion. A spokesperson said:
"It is business as usual at the moment and this is a story of growth. We are now agreeing up to 1.2m green deal [financing] plans a week and are looking at how to fund future growth for 2015 and 2016."
"[Voluntary liquidation] is very unlikely and just one of a range of scenarios. We have strong support from investors and are still right in the middle of discussions with the Green Investment Bank."