Hugh Bayley: Government is strangling the solar industry

A feed-in-tariff is a contract with a renewable energy producer which agrees to pay users a certain amount for the energy they produce. This helps to lower energy bills, as well as being better for the environment. The scheme is funded by a levy on energy companies which is passed on to consumers and costs the average householder less than £1 a year at present.

The scheme has been a huge success, with more than 87,000 solar installations completed in the UK since 2010. The solar sector employs 25,000 people, compared to just 3,000 in 2010, and the number of solar businesses has increased from 450 to more than 3,000 in this period. The solar industry is growing and creating jobs.

However, cuts in solar subsidies announced by the coalition Government will have a devastating impact on the industry.

The Government announced in the autumn that it would be reducing the feed-in-tariff for solar installations with a capacity of 4kW or less by more than 50 per cent, with effect from December 12.

This makes it more difficult for homeowners, businesses and local authorities to make a return on their investment and will reduce take-up of solar panels, putting thousands of jobs and businesses at risk. The solar industry is being attacked by a Government which promised to be “the greenest government ever”.

When the Labour Government introduced the scheme, it included plans for a review in 2013 to look at tariff levels.

Labour accepts the need for planned and sensible reductions in the tariffs, as the costs of solar units fall, but believes that the Government’s cuts go too far, too fast.

This opinion is shared by companies within the industry, environmental groups such as Friends of the Earth and organisations ranging from the CBI, the Federation of Small Businesses, the TUC and the Local Government Association.

The sudden change will be bad for growth and the economy and will do nothing to help consumers reduce their energy bills, which are set to continue rising this winter. Labour is campaigning for a more gradual reduction in the tariff level.

I have been contacted by many constituents who are concerned about the change in policy and have written to the Secretary of State for Energy and Climate Change, Chris Huhne, to urge him to press ahead with a more measured, sensible reduction that is fair to consumers and promotes the continued growth of the solar industry.

There are several companies in Yorkshire that provide solar panels and I met some of them recently. They have seen a fall in their predicted turnover for next year. One company hoped to recruit 10 more members of staff but are no longer able to do this.

The change will also have a major impact on local authorities, as the rate for multiple installations is to be reduced even more dramatically.

City of York Council was hoping to install solar panels on about 2,000 homes by March 31 next year, but this will now be difficult. A survey conducted by the Renewable Energy Association found that 31,522 social houses are likely to have their solar schemes cancelled.

According to the Government’s own impact assessment, household scale solar installations are expected to be cut by 70 per cent and school-sized ones by 95 per cent. And by restricting the tariffs to properties that meet a new energy efficiency requirement, nearly nine out of 10 families will be excluded from the scheme.

Cutting support for solar energy is one of many broken green promises from the Coalition. Following the Chancellor’s Autumn statement, it is clear that the Government’s economic policy is failing.

They have cut growth and driven up unemployment. The decision to cut feed-in-tariffs will make things worse and will do nothing to help those who are struggling to pay rising energy bills.

The Government should be supporting the expansion of the solar industry, not strangling it at birth.

Hugh Bayley is the Labour MP for York Central.