Feed-in Tariffs

Caroline Flint Excerpts

Thursday 9th February 2012 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

(Urgent Question): To ask the Secretary of State for Energy and Climate Change if he will make a statement on the Government’s reforms to feed-in tariffs.

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

I am sorry that the Secretary of State cannot be here today. He is in Cumbria opening the world’s largest industrial offshore wind farm—another big step forward in the deployment of renewables under this coalition Government.

The Government have today announced ambitious plans to ensure the future of the feed-in tariffs scheme and make it more predictable. The reforms will lead to a bigger scheme, providing better value. The feed-in tariffs scheme provides a subsidy, paid for by all consumers through their energy bills, to enable small-scale renewable and low-carbon technologies to compete against higher-carbon forms of electricity generation. The unprecedented surge in solar photovoltaic installations in the latter part of last year, owing to a 45% reduction in estimated installation costs since 2009, has placed a huge strain on the feed-in tariffs budget. That threatened the Government’s ability to roll out small-scale low-carbon technologies over the next few years in the numbers that we had wanted. We therefore acted as swiftly as possible to respond to the threat, through the changes we are now making to the tariffs for solar PV. Today is a turning point for the feed-in tariffs scheme.

[Gregory Barker]

The right hon. Lady might care to listen, because she clearly knows nothing about it. Rather than cackling, perhaps she will just listen for a change. The Opposition asked for a statement and I am giving it.

We have looked at the feed-in tariffs budget and made the most of the flexibility available under the levy control framework to ensure that we can keep the scheme going, but we want to do much more. The reforms I am announcing today are designed to make that budget go as far as possible to maximise the number of people able to benefit from feed-in tariffs. With the new reform package, we aim to give plenty of TLC—transparency, longevity and certainty, which were absent from the old scheme that we inherited from Labour. The reforms will provide greater confidence to consumers and industry investing in exciting renewable technologies, such as solar power, anaerobic digestion, micro-CHP, and wind and hydro power.

Instead of a scheme for the few, the new, improved scheme will deliver for far more people. Our plans will see almost two and a half times more installations than was planned by the Labour Administration, and that is just by 2015. That is good news for consumers and good news for the sustainable growth of the industry. We are proposing a more predictable and transparent scheme, as the costs of technologies fall. That will ensure a long-term, predictable rate of return, which will closely track changes in prices and deployment. Make no mistake: this will be a challenging package. The tariff degression mechanism that we will propose will not allow for fat profits or excessive rents, but it will show a serious ambition. Under our new plans, we believe that by 2020 we could see up to 20 GW of solar installed in the UK. That is a huge increase in our ambition for decentralised energy. This coalition wants to see a bright and vibrant future for small-scale renewables in the UK, in which each of the technologies is able to reach its potential and get to a point where it can stand on its own two feet without the need for subsidy, sooner rather than later.

In opposition, we promised a decentralised energy revolution, bringing power to the people. Today we take a huge stride forward to making that dream a reality.

[Caroline Flint]

I understand that the Minister was due to give a press conference at his Department at 11 am to announce his plans for feed-in tariffs. I hope that Her Majesty’s Opposition have not inconvenienced him too much by forcing him to come to this House to defend his plans. Nor will it have escaped the House’s notice that, faced with the first opportunity to deal with this chaotic policy, the new Secretary of State has ducked the challenge and gone AWOL. I do not think that is a particularly encouraging start. I received a copy of the Government’s statement only 20 minutes ago, so we shall have to look closely at the details of the announcement.

Last night, the Minister tweeted that he had an ambition for 22 GW of solar capacity to be installed by 2020. That is all very well, but not if his policies do not get us anywhere near the figure. Will he confirm that he is today proposing a further cut in the tariff level for solar power to 13.6p from July of this year? That would be a 70% cut in six months, which would be out of all proportion to the falling costs in the industry.

The Minister mentioned the analysis that his Department had commissioned, but will he confirm that the study was commissioned on 10 January and asked to report back just three days later? In those three days, how many businesses were consulted? Will he also tell us whether his plans will result in a contraction in the solar industry in the next four years and cause people to lose their jobs? The Minister tried to claim that his original plans would create an additional 1,000 to 10,000 jobs in the solar industry, but we have found out that that was the total number of jobs that the industry would support, not the additional number of jobs, which would in fact mean 15,000 to 20,000 job losses. I suppose that he will try to tell us that even deeper cuts will create even more jobs.

For months, I have warned that the Government’s plans to change the eligibility criteria would exclude nearly nine out of 10 families from having solar power. Moving the energy efficiency requirement from band C to band D is a welcome retreat, but will the Minister tell me how many people will still be excluded from having solar power, and how much they will need to spend on improving their property before they meet the revised eligibility criteria?

Finally, one of our deepest concerns with the Government’s proposals is that they will exclude everyone in social housing and community groups from having solar power. What have the Government done to enable people in social housing and community organisations to access solar power? More than 80% of the people who responded to the first consultation told the Government that they had got it wrong. The appointment of a new Secretary of State was an opportunity for them to change course. Today, we can see that they have failed to take that opportunity.

[Gregory Barker]

I am sorry that the right hon. Lady constantly sees the glass as being half empty, and carps at a very ambitious scheme that will be very good news for the industry. She clearly wants to invest her political capital in failure. If she looks at the consultation, she will see that we are proposing a further cut in the tariff for solar power. She mentioned one of the options, but there are actually three. The proposals for smaller schemes, which typically involve installations on the roofs of average homes, include the options for 16.5p, 15.7p and 13.6p. We will consult on those options. She clearly does not understand the big dynamic that is driving down costs. We welcome the fact that costs are coming down, and we are determined to ensure that tariffs come down with them. If she wants to stick to, and defend, the old scheme, she is welcome to do so.

I welcome the right hon. Lady’s acknowledgement that we listened to the consultation—that rarely happened under her Government—and that we are going for band D. More than 50% of homes in Britain already meet the band D criteria, and, when the green deal is launched in the last quarter of this year, everyone in the country will be able to access measures to improve their home at no up-front cost. We have also announced today that we are going to consult on a community scheme, which the Labour Government failed to introduce when they launched this programme. For us, communities are at the heart of the renewable energy revolution, and we want to do far more to encourage and enable communities to come together to generate low-carbon and renewable energy. We expect to be able to achieve exactly that under this scheme, which will be bigger and deployed to give better value for consumers and householders.