CBI condemns feed-in tariff cuts

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The UK’s biggest business group has joined the chorus of criticism over Government plans to slash the subsidies for household solar electricity.

The CBI’s director-general John Cridland said plans to halve feed-in tariffs, which are paid to people who generate electricity from small scale renewables, for domestic solar panels was “the latest in a string of Government own goals”.

Under the proposals, the subsidies will be halved for new units installed from December 12, even before the consultation is due to end.

Ministers say the reductions are necessary to ensure that the feed-in tariffs paid for household solar, which has proved much more popular than anticipated, do not end up costing consumers - who pay for the scheme on their bills - too much.

But Mr Cridland said moving the goal posts in this way destroyed projects and jobs, and undermined investor confidence.

In a speech to the CBI East Midlands annual dinner tonight, Mr Cridland called for an industrial policy that helps the UK expand its share of the low-carbon sector, which has been growing globally throughout the recession.

He said the dramatic cut in the solar feed-in tariff, on the cards from April next year but now being brought in in December, was the latest in a string of own goals by the Government, which had already turned the carbon reduction commitment incentive scheme into “a pure revenue-raiser” and taxed North Sea oil and gas.

He said: “Moving the goal posts doesn’t just destroy projects and jobs, it creates a mood of uncertainty that puts off investors and they wonder what’s coming next.

“Some companies have invested heavily in solar photovoltaic systems and in the supply chains needed to install them.

“That commitment has been undermined by the feed-in tariff decision - and so industry trust and confidence in the Government has evaporated. This bodes poorly for investment in future initiatives.

“A new industrial policy needs to recognise the real-time costs of these decisions, and should set out a clear path that investors understand and can believe in.”

His comments follow an attack on the Government’s plans to cut solar subsidies by the Local Government Association, who warned it would cost councils who had attempted to roll out the technology to poorer households hundreds of millions.

Projects would be cancelled and low-income families would miss out on the chance to see reductions on their energy bills delivered by access to free energy from the solar panels, the LGA warned.

The Department of Energy and Climate Change is facing two legal challenges over the plans.

A spokeswoman for the Department of Energy and Climate Change said: “We appreciate this will be difficult for companies affected but what we want is an enduring future for the industry.

“If we left things as they are, the feed-in tariff budget would be eaten up entirely, full stop, and that would be even worse for employees in this sector and those working on other technologies too.

“We believe solar PV (photovoltaic) can have a strong and vibrant future in UK and we are proposing changes to ensure a lasting FITs (feed-in tariffs) scheme to support that future.”