FIT for Labour

As long-time supporters of Green causes, Cllr Catherine Dawson of Mincinglake and Cllr Paul Bull of Cowick put forward a motion to Full Council on 13 December that condemned the sham consultation on changes to the scheme of Fit-In Tariff payment for the micro-generation of solar power photo-voltaic [PV] panels. Announced by the Coalition Government at the end of October, the consultation runs until 23 December, even though the changes to payments came into effect on 12 December.

The motion was presented to Full Council on 13 December, the day when the Our Solar Industry lobby group held protests outside Parliament asking the Government to Cut Not Kill the solar power industry and two days before a legal challenge to the changes.

Both councillors have had solar PV panels installed on their own roofs – installed by Sungift Solar.

They thanked the firm for honouring their their pledge to put up Exeter’s Christmas lights for free. The change in payments under the FiT scheme has meant they’ve been extremely busy, trying to install 6 months’ worth of orders [some 50 systems or so] in 6 weeks.

This Council calls on the Government to reverse its cruel cuts to the tariff which will harm a lot of residents in Exeter.

They are planning to cut the tariff for solar PV installations with a capacity of 4KW or less by more than 50% from 43p/kWh to 21p/kWh. For multiple installations the rate falls to 16.8p/kWh.

Their rushed cuts to the Feed in tariff for solar PV goes too far, too fast, hits families trying to protect themselves from soaring energy bills, put thousands of jobs and businesses in the solar industry in jeopardy and give lie to the government’s promise to be the “greenest government ever”

The FiT scheme is a process used by over 40 countries around the world that pays people to generate electricity from solar photovoltaic [PV] panels funded by a small levy on all energy bills

When the FiT was introduced by Labour in April 2010, the UK belatedly joined the party in one of the fastest growing markets of any kind globally.

The Feed-in Tariff certainly isn’t perfect, but it’s been incredibly successful at getting panels on roofs.

This doesn’t just help people reduce their electricity bills and carbon emissions – there’s plenty of anecdotal evidence that seeing the panels in action (and reaping the rewards) can change the way people think about energy.

They then are more likely to make climate-friendly choices in other areas of their lives.

Yet back it when it was announced back in April 2010 it was criticised by the Conservative opposition.

Heavily criticised.

Greg Clark, then Shadow Energy Secretary said:

“FITs are essential to allow decentralised energy to play a major role in our energy mix, but Labour’s proposals today lack ambition.

“Ministers should have been bolder with this scheme so more jobs could have been created and greater reductions in emissions could have been achieved.”

But even before that, back in 2007, David Cameron welcomed FiT schemes when spoke to a Greenpeace conference.

Yes he was green. He was extremely green.

Indeed he was green with envy of the generous FiT scheme in Germany.

He saw how it was taking British-made technology and putting it on German roofs.

He wanted “The right plans and the right political will to drive through a mass market for micro-generation”

In response to this quote, Paul used a phrase he thought he’d never utter –


In Opposition, both the Lib-Dems and Tories dismissed the Labour initiative as pitifully unambitious.

In Government, they pledged to do much more.

The Coalition Agreement even pledged to make FiT the centrepiece of their commitment to ‘community owned renewable energy generation’.

But you would never guess it now.

So what went wrong?

Were they got at by the Big 6 Energy Companies – and their paid lobbyists?

Did they listen to the Nuclear Industry – and their paid lobbyists?
All we know is that the solar energy industry was too busy putting solar PV panels on people roofs to have time to pay for lobbyists.

David seems to have taken his green thoughts, mixed them with his true blue blood and turned yellow.

The terms small-scale and micro-generation are used a great deal when referring to solar PV panels. Does this mean only small amounts of electricity are being generated? Not at all – the energy generation of solar power in the UK now exceeds the 225 megawatts maximum operating capacity of the Oldbury nuclear power plant

Let’s look at some figures:

The feed-in tariff scheme was introduced under the Labour government in April 2010. Since then:

  • The number of businesses working in the solar power industry has increased from 450 in 2010 to over 3,000 today
  • The UK solar energy industry now employs over 25,000 compared with just 3,000 in 2010
  • Since the introductions of Feed-in Tariffs, nearly 90,000 installations have been completed
  • The number of people employed in the solar industry has increased by 25,000
  • Families, community organisations and businesses have gained greater control over their energy bills.

All of which could help the Tory Government meet its claim of being the greenest government yet – and at the same help the private sector create new jobs.

Under the cuts announced by the Conservative-led government at the end of October:

  • Six weeks’ notice was given, despite the consultation period continuing beyond the cut-off date for another 11 days.
  • 9 out of 10 households will be completely excluded from installing solar power through the link with energy efficiency banding – only band C and above which is 10% of UK housing stock.
  • The cuts are retroactive, in that they will affect projects already under contract which cannot be registered in time. The registration process alone takes an average 7 weeks.

As a result, the demand for solar PV panels is expected to be reduced by 92%. It is anticipated that 57% of companies will lay off at least half of their staff and 30% anticipate going out of business.

The premature cuts could cost up to 29,000 jobs and lose the Treasury up to £230 million a year in tax income.

These rushed cuts will destroy one of the few growth industries we currently have in this country. It is simply extraordinary that a government whose tone is becoming ever more desperate in the search for private sector job creation has opted to attack this industry.

The south west has one of the largest solar industries in the country. More than 380 companies are based in this region, and the region accounts for 20% of projects to date.

A suitable household in Exeter can produce 130% of its annual electricity needs through a domestic PV system. This clearly contributes substantially to helping the UK meet its renewable energy targets, and to reduce carbon emissions, as well as to our national self-sufficiency.

Ironically the cuts were announced in the same week as this Council was preparing to announce an ambitious deal with E-On that would see our housing stock and the tenants therein benefit from solar installations, reducing their bills by an average of £190/year per household. It was only by quick negotiations from our officers that the scheme was rescued

Other local authorities with imminent plans to help their tenants out of fuel poverty have been forced to break their promises and cancel their schemes.

These agreements included assistance to tenants whose homes were unsuitable for solar PV through reinvestment in energy-efficient measures.

The cuts particularly affect local authorities and social housing schemes because the rate for multiple installations will be cut over and above by an extra 20%.

The cuts ensure that control of energy bills through investment in solar PV will now be limited to the wealthy.

What might not be known is that from the start it was always planned that Feed-in Tariffs were supposed to decrease annually, as the price of technology falls.

Unlike nuclear, solar does not need subsidising forever.

That was part of attraction

There would be staged reductions in in the tariff, down to zero within the decade.

The legal framework set up by the previous government allows for digression of the tariff – the guaranteed FIT rate was always meant to fall as solar’s share of total energy production grows.

The Feed-In Tariff per kilowatt hour, guaranteed for the 25 years, for anyone signing up in any particular year was to be:

2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2019/20
41.3p 41.3p 37.8p 34.6p 31.6p 28.8p 26.2p 23.8p 21.7p

The rates announced by the Coalition on 31 October is that which was expected to be paid to people signing up in 2019/20.

No-one is suggesting that the government does nothing.

With the price of solar panels is coming down, the investment returns are showing as better than the 5% anticipated in April 2010.

The solar industry had argued in the summer for a 25% cut in line with falling costs, and had been promised a full consultation. Expectations were for a full and proper Parliamentary consultation of at least the standard 12 weeks and Parliamentary process in March 2012.

This current rushed consultation which ends after the cut-off date is not what the industry wanted or indeed was promised. It is a mismanaged sham, and the Department of Energy and Climate Change has been unable to supply evidence for the need to cut by 50%.

The evidence does not exist. It is an arbitrary figure, as you might expect when there has been no comprehensive review. Again, sensible medium term digression rates fixed to deployment have not been set, which would allow investor confidence.

The government created this bubble, where people have rushed to install before April, and have now burst it.

“Industry trust and confidence in the government has evaporated” Not the words of Friends of the Earth, but the CBI.

The reduction “effectively slowly suffocates the growth that the policy has so far encouraged”. That was that well known hippy, Boris Johnson.

There is some confusion about the scheme’s cost. Let’s be clear. There is no public expenditure involved in funding the scheme, which is funded by the energy companies. The cuts CANNOT contribute to reducing the public sector deficit. In fact, the Treasury gets more back in tax and National Insurance from the jobs created than the scheme costs to run.

Crocodile tears have been shed by the Secretary of State and Minister for Energy and Climate Change about the cost to consumers through rising electricity bills. Although in the Opposition Day debate government MPs were picking figures out of thin air, the DECC’s estimate is that doing nothing until April will add 80p to household bills by 2020.

80 pence. It’s not a sum around which the economy will crumble

Let’s put this in context.

  • Average annual bills of £1345
  • Standard tariffs up by £175 since June
  • Winter fuel payments cut by this government by £50 or more
  • £260 per house as a contribution to decommissioning nuclear power stations

60% of our energy is currently imported, and this figure continues to grow. It is this volatility that is driving up energy bills.

Chris Huhne (who in 2010 was criticising the Labour government for not going far enough and calling for a tripling of the scheme’s ambition) claims that tariffs are now in line with those being offered in Germany.

The truth is that Germany’s tariffs are in fact lower. But Germany is a mature market. Solar feed in tariffs in their present form were introduced in 2004, and kept above 50c/kWh for the first three years then above 40c per kWh for the next three. Germany now has 55GW of renewable energy, which has cut peak demand and prices by 25%. German energy prices are still around the same as they were in 2008.

Germany reached their goal of 12.5% electricity supplied by renewables by 2007, and now working towards 30%. They have made their investment, and now have a sector employing 150,000 people with former small and medium enterprises [SMEs] now operating as successful multinationals. In contrast, we are strangling our industry at birth before we can even begin to deliver modest results, and before the poor can see any benefits at all.

There is opposition to increasing the market share of solar and other renewables. It comes from the existing big utilities who are not eager to lose their market share, do not want more competition or democracy of generation, and will fight every step for the status quo as they have in Germany. These cuts are driven by the lobby and the party donors. The drivers should be us politicians who have responsibility for the national interest, and who have had the vision to see the scheme thus far.

The cuts to the Feed-In Tariff will deprive the UK of a booming green industry that is driving jobs growth and providing an environmentally sustainable and long-term alternative to other fossil-fuel dependent methods of electricity.

Already leading solar firm Carillion has confirmed that some 4,500 jobs are now under threat due to the planned cut to the subsidy.

Indeed the firm that put solar panels on the Kensington roof of the Prime Minister have already laid off 2 workers.

So rashly withdrawing support from this burgeoning industry will be disastrous for both our economy and the environment.

These reductions in tariff were to have been there to fairly reflect falling solar prices, and were planned so as to be not be too deep to stall the development of a domestic UK solar industry.

Cutting so far and as fast as this Government has done will put thousands of solar workers out of a job and pull the rug out from under small community groups that have already poured time and effort into their projects, but don’t stand a chance of meeting the new deadline.

Do these cuts need to happen at all?

Unlike other government programmes, the FiT scheme isn’t funded from general taxation – the costs are covered by a levy on energy bills.

When the Labour government was designing the scheme, they came up with an estimate of how much it would cost, and planned to revisit this figure once they had some proper take-up data.

When the coalition came into power and kicked off the spending review, they took this estimate, cut it by 10% and set that as the overall budget for the whole programme.

It’s not clear why the scheme was included in the spending review at all, since it isn’t funded directly by the treasury and doesn’t increase the deficit; but whatever the reason, it means that the whole idea of a Fit ‘budget’ is an invention of this government.

Decisions like this are really just a question of priorities – if a government really wants to do something it will always find a way of financing it.

But in any case the impact of the Feed-in Tariff is tiny compared to spiralling gas prices and energy companies’ profits

And even if we rule out any bill increases, there are plenty of other ways to meet the cost – from a direct levy on energy company profits, to reallocating money from other programmes that have underspent.

Yet it recently emerged that climate minister Chris Huhne never even asked the treasury whether they could provide emergency funding to allow the cuts to be phased in gradually.

The real measure of a government lies in the choices it makes when there’s no easy option. Ministers need to ask themselves: when all is said and done, will these cuts bring us closer to a truly low-carbon economy, or will they push it further over the horizon?

Any government that wants to be remembered as the “greenest ever” must put this question at the heart of every decision, but especially over this particular decision.

We say “From the greenest government ever to the meanest government ever”.

The co-coalition has done a huge U-turn and is now doing nothing less than demoralizing – and demonizing – the solar power industry as a matter of course.

Over the weekend we both spoke with Caroline Flint, Labour’s Shadow Energy Secretary and we agreed that history will record that Labour began this growth industry and the Tories will all but kill it off in its infancy if these mindless changes to the FiT scheme are not reversed.

The government must act urgently to reverse these ill-thought-out cuts. It must instigate a full review with the proper consultation period installed before touching the feed in tariff. It must ensure that local authorities, social housing providers, community groups and voluntary organisations are protected. And it must remedy its past actions and finally create the stability that this most innovative and necessary of industries.

At the meeting of Full Council on 13 December, the motion was put and a great deal of debate ensued. A Lib Dem amendment was proposed, instructing the City Council to engage with the consultation over the FiT changes.

Catherine and Paul rejected the amendment as it deleted the call that the Coalition Government reverse its cruel cuts to the Feed-In Tariff.

Voting was tied 18 all, with the Tories voting with the Lib Dems. It was left to the Lord Mayor, Lib Dem Cllr Stella Brock, to use her casting vote from the chair and allow the amendment to be carried.

Minutes of the Full Council


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