Feed-in Tariffs (Amendment) (No. 3) Order 2015

Baroness Featherstone Excerpts

Tuesday 2nd February 2016 Lords Chamber

Moved by

[Baroness Featherstone]

That a Humble Address be presented to Her Majesty praying that the Order, laid before the House on 18 December 2015, be annulled (SI 2015/2045).

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee

[Baroness Featherstone (LD)]

My Lords, this is an important debate, and it is with regret that I felt that I must table this fatal Motion, as I am aware of the significance of this action, but regard the matter as so serious as to merit such a Motion. The order makes policy changes which will have far-reaching and detrimental effects—effects which will not only put our renewables industries in serious jeopardy but impact on our ability to deliver our legally binding renewable energy targets. Furthermore, the strong economic case for investing in the sector seems to have been ignored, neglecting what could and should be an extremely significant source of Britain’s future economic prosperity.

The feed-in tariff scheme is the Government’s main mechanism to encourage the deployment of small-scale, low-carbon electricity generation, and the order imposes two caps: one financial and one that controls generation capacity. The financial cap of £100 million applies to all renewables technologies right up until 2018, meaning that they will get approximately £35 million a year between them all for new-build deployment. The generation cap on each technology sets a quarterly maximum which, translated, means that even if there is demand, suppliers will be prohibited from meeting it. That is extraordinary micromanagement of an industry.

The industry understands that subsidies must end—there is no argument about that—but the economically sound way to respond to that is to reduce subsidies at a rate that allows the industry to continue to grow and move to a stable, subsidy-free footing. That is not what the Government are doing, alas. The rug is being pulled from underneath the industry, reducing the size of the workforce by up to half, just when other countries around the world have spotted the business opportunities in this sector and are increasing their investment. The steepness and abruptness of the Government’s proposals caused shockwaves across the industry—security, confidence and investment all undermined at a stroke.

The Secondary Legislation Scrutiny Committee states:

“We draw this Order to the special attention of the House on the ground that it gives rise to issues of public policy likely to be of interest to the House”.

The committee further notes that there was a very high level of opposition to the DECC proposals in the responses to its consultation from the renewables sector, with a total of 54,630 written responses, of which 2,634 were unique responses. The majority objected to the proposed deployment caps and 90% disagreed with the proposed generation tariffs. Following the consultation, the Government made some changes: the reintroduction of the pre-accreditation scheme; the lessening of the reductions to the feed-in tariffs from 87% to 65%; and making tariff bands clearer—which are all very welcome. I have no doubt that the Government will argue in this debate that they moved following those representations, but I do not believe that they have moved one iota beyond their originally intended position.

Our renewable industries have been remarkably successful. In the new low-carbon sector in the United Kingdom, 11,500 companies are involved with 460,000 people turning over, in 2013, about £120 billion. The major player is solar. This is good for the economy and for the planet. The deployment limits will severely impact on the size of one of the cheapest low-carbon energy options just at the very moment that there is a need for greater deployment of renewables. Only one week ago, Ban Ki-moon said:

“I call on the investor community to build on the strong momentum from Paris and seize the opportunities for clean energy growth. I challenge investors to double—at a minimum—their clean energy investments by 2020”.

However, investors will not come here. We are going in the wrong direction.

--- Later in debate ---

I admit there is a challenge to the renewables industry here. We need these changes. We recognise the importance of ensuring that we decarbonise but, as I indicated, it is not a small amount to spend £1,300 million per year through the FIT scheme on renewables. With that, I ask the noble Baroness to withdraw her Motion. I recognise that there are strong feelings on this but it is not appropriate to table a fatal Motion every time there is a government policy you do not like. That is not the way forward. I hope the Liberal Democrats will see their way to withdraw the fatal Motion, even at this late juncture.

[Baroness Featherstone]

My Lords, I thank all the speakers in this debate. It has been very instructive and informative, and so many of the contributions were knowledgeable. I thank the Minister for the government response.

My purpose in tabling this Motion to Annul was really to persuade the Government to go back and work again with the industry. It is exactly that rate and degree of change that we are discussing. As for it being a fatal Motion, when will the Government stop submitting negative SIs that are unamendable? They did so with this one on 18 December, just before the rising for Christmas, and buried in a slew of SIs, which might have denied us any debate whatever. It is important, given the seriousness of the issues I raise, to say to the Minister, “I want the Government to go back on this”.

I noted the quote from the Solar Trade Association but I would say the same if I were in its position and not wanting to put off investors. The Minister asked how I would reduce the subsidy. My answer is, again, to go with the industry and see whether there could be a new rate of decline of subsidy and an agreed timetable. That is not for me to say as I do not run these industries, but I know from the level of complaint and amount of lobbying I have received that there are genuine and serious concerns.

What I heard generally from this House in the excellent speeches was that most noble Lords agree with the ends and that there needs to be a change, but were not willing to will the means to get to that end. I listened carefully to the Minister’s response. I hoped to hear willingness to make further amendments. Sadly, I heard none. Therefore, I wish to test the opinion of the House.