Solar Power (Feed-in Tariff)

Lord Barker of Battle Excerpts

Wednesday 23rd November 2011 Commons Chamber

[Caroline Flint]

I shall make a little more progress before giving way.

Myth No. 5 is the idea that the Government’s plans are just like what has happened in Germany. Nothing could be further from the truth. The German Government invested €6.5 billion in solar last year; we are investing £860 million over four years. Germany has installed half the solar panels in the world and supports 250,000 jobs in solar; we have installed just 90,000 panels and have only one tenth of the jobs. This year the tariff for solar power in Germany was cut by 15%, in agreement with industry and only after installation levels reached a fixed benchmark: here the Government have announced a cut of more than 50%, with no proper consultation and only six weeks’ notice, which will take our solar tariff below that of Germany.

None of the Government’s excuses will wash, because the truth is that their cuts to the feed-in tariff for solar power are a triple whammy. They are bad for jobs and growth, bad for the public and bad for the environment.

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

The right hon. Lady is right to say that the German Government are reducing the tariff by a much smaller amount. In January they are reducing it by about 15%, but they are reducing it to €0.24, which is almost exactly equivalent to the 21p tariff that the Government propose. They are reducing the tariff to the same level as ours.

[Caroline Flint]

Dearie me! The Germans have been planning how to staircase down their tariffs for years. They have a mature industry that is the world leader. We are not in that ballpark. That is why we must ensure that we do not strangle our industry at birth.

The cuts are bad for jobs and growth, bad for the public and bad for the environment. When growth is flatlining and unemployment rising, solar is one industry that is growing and creating jobs. When the previous Government introduced feed-in tariffs, just 3,000 people were working in 450 firms; today more than 25,000 people work in 3,000 companies. By 2020, as many as 360,000 people could be working in solar—but not if the Government’s cuts go ahead. Be in no doubt that the Government’s current plans will strangle the solar industry and cost thousands, if not tens of thousands, of jobs.

A survey conducted by the Renewable Energy Association and the Solar Trade Association earlier this month forecast in excess of 10,000 job losses. Fifty-seven per cent. of companies anticipate having to lay off at least half their current staff, a third are worried that their business will be forced to close altogether, and fewer than one in six are confident that they can weather the changes. That is the reality.

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[Caroline Flint]

I want to make some progress, because I am conscious of time and lots of people want to speak.

For every job in the solar industry, many more in the supply chain are also at risk. According to the Minister’s colleagues in the Department for Business, Innovation and Skills, the solar industry and its supply chain employ about 39,000 people and resulted in nearly £5 billion of sales last year. All of that is in jeopardy. Sharp Solar, which was mentioned by my hon. Friend the Member for Alyn and Deeside (Mark Tami) and which is in the constituency of my hon. Friend the Member for Wrexham (Ian Lucas), currently employs about 500 people at its plant manufacturing solar panels. It is now warning that because of these cuts it is reviewing its presence in the UK, putting hundreds of jobs on the line. Given that we need to invest up to £200 billion in our energy infrastructure in the next 10 years, how can anyone have confidence in a Government who are so short-sighted that with just six weeks’ notice they are killing off a flagship policy that has cross-party support?

[Gregory Barker]

Before the right hon. Lady scaremongers any further, may I confirm that I spoke to the European head of sales at Sharp yesterday, and it has no plans to close its UK plant? It remains an important centre of European manufacturing.

[Caroline Flint]

Such companies are worried about the policies on the table, and they will be waiting with bated breath to see what happens. There are containers full of panels on our docksides all round the country not being used because sales orders are being affected by the Government’s policies.

Since we introduced feed-in tariffs nearly 90,000 families have benefited. That has helped those who want to do the right thing and green their homes, while also trying to protect themselves from soaring energy bills. However, under the Government’s plans nearly nine out of 10 households in England will be excluded from solar power and denied the chance to get just a little more control over their energy bills. That is because properties will be eligible for feed-in tariffs only if they have a minimum energy performance rating of C or above.

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[Katy Clark (North Ayrshire and Arran) (Lab)]

I am grateful for the opportunity to pay tribute to Alan Simpson, the former Labour MP who tabled the amendment that led to the legislation on FITs. I am sad that the present Administration have succumbed to the lobbying power of the big six energy companies by taking the first step in the erosion of FITs in this country. Government Members have mentioned Germany, which has a strong FITs system, and its tariffs led to far lower energy prices than we have in this country. FITs are about where the power is, and one of their impacts is to transfer power from the energy companies to individuals—to the consumer—and to communities. That is why I am sad that the Government have introduced these proposals.

[Gregory Barker]

On a very important point of fact, energy prices in Germany are not lower. The cost of electricity to the German consumer is significantly higher and, importantly, 45% of the consumer’s bill there is made up through levies and policy impacts as a result of renewables legislation.

[Katy Clark]

As the Minister will be aware, energy prices in Germany are at the levels they were in 2008, which is a very different situation from the one we are in. Opposition spokespeople have already spoken about the bills that individuals and businesses have to face under this Government.

The Government are rushing to introduce their proposal, which will cause havoc for all the reasons outlined by many Opposition Members and, indeed, by some Government Members, because they chose to put a ceiling on the solar FIT budget. That was not the position under the previous Government. Will Ministers explain whether they have looked at surpluses in other renewable energy budgets, and ask the Treasury if they can use those budgets to ensure that more money is available for solar, given the runaway success of the scheme?

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[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

I believe in the huge potential of solar. Like my hon. Friend the Member for Sherwood (Mr Spencer), who made an excellent speech, I believe it is a terrific technology. It is intuitive, dynamic, attractive to consumers and easy to install, and I am determined to see it at the heart of the coalition’s ambitious plans to bring decentralised energy to millions of Britain’s homes, communities and businesses. What is more, unlike the right hon. Member for Don Valley (Caroline Flint), I campaigned for it, voted for it and genuinely believe in it.

However, for those of us who are passionately committed to the green agenda, there are two great threats in these difficult economic times. First, and obviously, there are the climate change deniers, but secondly, and I think even more dangerously at the moment, there are the deficit deniers. There is no greater bunch of deficit-denying opportunists than Opposition Front Benchers, who seem to think that the green economy lives in a vacuum, immune to the economic realities confronting every other sector of the British economy and to the impact that that has on consumer bills.

The fact is that Labour was wrong to vote against feed-in tariffs in November 2008. It was also wrong to introduce them in April 2010 without any budgetary control mechanism at all, and wrong to ignore lessons from the successful FITs model in Germany. It was wrong to ignore totally the potentially huge impact that FITs could have on the fuel-poor in particular, and catastrophically wrong earlier this year when it insisted that our early review of large-scale feed-in tariffs would butcher the entire UK solar industry. In fact, following that statement by the Labour Front Benchers, the deployment of solar technology has risen by more than 300%, and it has risen more than tenfold since the beginning of the year. The statistics are staggering.

No wonder Which? has stated:

“It’s right that the Government properly controls spending on Feed-in Tariffs as everyone pays for this scheme through their energy bills.”

No wonder the chief executive of Consumer Focus has said:

“The Government is taking a sensible approach to protect energy bill-payers with the proposed changes to Feed-in Tariffs. Incentives to overcome the high set-up cost of solar panels and help make our energy supply greener are necessary. But the cost for this is passed onto bills of energy customers and we need to strike a balance.”

That is exactly what we need to do—strike a sensible balance between our high ambition for decentralised energy and recognising the costs of what is still the most expensive to support of the whole array of decentralised technologies.

Unfortunately, Opposition Front Benchers bury their heads in the sand. The notion that spending billions on solar would cost no more than £1 on people’s bills is from cloud cuckoo land. They clearly have not yet got up to speed with their brief. They will know from the impact assessment that we published in September that the central estimate is that it would add £28 to bills every year by 2020. Since then the estimate has risen again, and the higher estimate is £55. We now know, given the level of deployment in October, that if we did not act now it would add up to £80 to everybody’s electricity bills.

Tell that to the 5.5 million people whom Labour left in fuel poverty. Let us not dwell on the fact that Labour cannot add up and are a bunch of deficit deniers. We know that because of the state they left the economy in.

Some very sensible comments have been made in this debate, and I am very grateful to all colleagues.

[Dr Whitehead]

On the impact assessment that the Minister himself carried out, does he accept that the £26 is relevant only if the tariff at its present level continues until 2015, which was never the scheme’s intention in the first place, on anybody’s reckoning? Will he withdraw that suggestion and replace it with what is the case in the impact assessment? [Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order, Minister. Has the hon. Gentleman finished his intervention? Right, now it is the Minister’s turn. I think that we will decide, thank you.

[Gregory Barker]

I am afraid that the hon. Gentleman is wrong. The impact assessment relates to no change until April next year, and then there will be degression, as planned by the Leader of the Opposition when he was in government and set up this poorly conceived scheme last year. So, as I say, I am afraid that he is incorrect on that point.

We have had some extremely sensible contributions. The one from my hon. Friend the Member for Montgomeryshire (Glyn Davies), in which he flagged up the impact that the scheme will have on not only fuel bills but the fuel-poor, was absolutely right. Too often the voice of the fuel-poor is distorted. Yes, it is great for the few thousand who may benefit from solar panels in social housing, but what about the other 5.5 million whom Labour left in fuel poverty, who will not benefit but would still face the prospect of £80 on their electricity bills? Go and tell the other 5.5 million people who will be left out how they are going to find the extra £80 if we do not act now.

My hon. Friend the Member for Dudley South (Chris Kelly) was spot-on in his analysis and my hon. Friend the Member for Loughborough (Nicky Morgan) was right. I am afraid there is absolutely no sign of anything that even looks like a “Sorry” from Opposition Front Benchers for the mess they made of setting up the scheme. My hon. Friend the Member for Truro and Falmouth (Sarah Newton) was right: we need to learn the lessons from Labour’s failed scheme, particularly because although the feed-in tariff scheme supports solar, it also supports a whole range of other technologies. We must not forget that. We want a diverse, innovation-rich, decentralised energy economy, and there is a lot more to the feed-in tariff scheme than solar alone, important though that is.

My hon. Friend the Member for Sherwood made excellent points about Germany. He was spot-on when he said that we need to pull solar into the mainstream of the green economy, rather than leaving it as a bubble in a silo at one side. That is why the launch of the green deal will bring solar into the mainstream. That is a very exciting proposition. The hon. Member for North Cornwall (Dan Rogerson) also made some excellent points, and I share the view that we need to have a consistent regime. [Hon. Members: “They’re all on your side.”] The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) listed and spoke at length to Opposition contributions. I have very limited time, so I am going to mention those from my hon. Friends first.

However, I recognise that there is genuine concern about the implementation of the reference date of 12 December, and that it will be a real challenge for a lot of companies. We did not do this lightly. We have had to move quickly in order to protect the budget. Unfortunately, if we had not done so we would have had to do what Labour did in the past and close the scheme completely. We will not do that. We are protecting the scheme for the long term and for sustainability. This is a genuine consultation. We are constrained by the budget and by demand, which is going through the roof, but at the same time, I am listening carefully to the many sensible representations—

[Mr Alan Campbell (Tynemouth) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Question put accordingly (Standing Order No. 31(2) and Order, 14 November), That the original words stand part of the Question.