The Green Deal could be damaged by the EU according to the BMF, in their attempts to regulate VAT across EU member states. The Builders Merchants' Federation warns that enforcement of an EU Directive may scupper the Green Deal.

The European Commission has told HM Government to amend UK legislation, which allows a reduced VAT rate for the supply and installation of energy-saving materials - such as insulation. The EU says the current 5% rate levied on these materials is illegal, and if the Government does not change British law within 2 months, the Commission may refer the matter to the European Court of Justice.

The BMF and others within the industry, have been urging the Government to extend the 5% VAT rate to all Green Deal projects, however the European Commission's move could prove disastrous.