Feed-in Tariffs (Lottery Funding)

Jesse Norman Excerpts

Monday 11th November 2013 Commons Chamber

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Let me start by thanking Mr Speaker for kindly granting this debate on lottery-funded projects and feed-in tariffs. I had hoped to speak in a Westminster Hall debate on the topic in October called by the hon. Member for North Cornwall (Dan Rogerson), but the then Minister was the beneficiary—or perhaps the victim—of a reshuffle and the debate was cancelled. This Adjournment debate is a welcome opportunity to address these matters properly.

Some debates in the House are on topics of purely general importance, but this one specifically concerns two villages in a remote part of my county of Herefordshire. The issue, however, is of huge importance to those villages and their residents. Indeed, it would not be too much to say that it gravely affects their well-being as well as that of a local school. It also raises a general issue relevant to other village communities as well as wider questions of fairness and responsibility that directly concern the Government. For all those reasons, I thank Mr Speaker for granting the debate and ask the Government to give it their close attention.

Clifford and Moccas are isolated villages on the western and northern edges of my constituency. Both are blessed with village halls that are well-used and well-supported by local people. In early 2011, both communities were awarded grants from the Big Lottery Fund, which distributes moneys on behalf of the national lottery, to install solar photovoltaic panels on their village halls. The motivation in each case, which was clearly stated throughout the application process, was to claim feed-in tariff payments to help meet the running costs of the halls.

The schemes were installed in late 2011 and early 2012. Clifford received a £10,000 grant from the Big Lottery Fund and raised a further £15,000 from the local community. Moccas received a grant for £9,603, which covered the full value of the works. In spring 2013, however, two years after the original awards, both communities were told that their eligibility for feed-in tariffs was under threat as grants from the Big Lottery Fund had been reclassified as state aid. The communities were presented with two options: to pay back the funding received from the Big Lottery Fund and continue to claim feed-in tariffs; or to keep the Big Lottery Fund money and give up any entitlement to feed-in tariffs.

On 6 June 2013, in response to a question from the hon. Member for Wells (Tessa Munt), the Secretary of State for Energy and Climate Change said that he hoped that his Department would look into the matter. On 6 September 2013, however, a written question from me received a reply from the Department stating that it was not investigating the matter and that it was for Ofgem, which administers the scheme, and its licensed suppliers to determine eligibility for feed-in tariffs based on the legislation.

On 3 October I received a letter from Ofgem that disavowed responsibility, stating that it did not set the policy underpinning the feed-in tariffs scheme, which was the responsibility of the Department of Energy and Climate Change. The letters also said that the Big Lottery Fund grants were classified as “grants from public funds”, as the national lottery and the apparatus through which it distributes funding were established by statute. As a result, Big Lottery Fund grants were subject to the rules on state aid and it was not possible to combine a grant with the receipt of feed-in tariffs.

The Big Lottery Fund has given the village hall committees the opportunity to convert the grant money received so far into an interest-free loan. That is to be welcomed but it does not address the underlying problem, which is that a change in the scheme administered by Ofgem is causing tangible hardship to the villages. It is even having a negative effect on a lovely local school. Clifford primary school is located on the same site as the village hall and was a partner in its solar panel project. Indeed, the project is a key part of its eco-schools accreditation. The head teacher tells me that the school might have to be run at a deficit purely as a result of this uncovenanted and unilateral change.

That turn of events was entirely unnecessary. Both hall committees and Clifford primary school entered the agreements in good faith and, to put the matter in the kindest light, appear to have been let down by poor communication somewhere along the line. The question goes deeper, however, and raises issues of fairness and accountability and of management within Government. So far, both the Department and Ofgem have disavowed any responsibility for the mishap. Each has placed responsibility with the other. My question is simple: who is responsible?

How is it possible that Moccas and Clifford hall committees were notified only in spring 2013 of the change in legislation that happened two years earlier? How can it be right for the Government to have allowed national lottery funding to be classified as state aid when its moneys derive from private gambling on the lottery? The question becomes still more pertinent when one considers that the statutory body is the National Lottery Commission, which does not give out any money at all. The lottery is, in effect, a trading name for Camelot, a private company. Clicking on “About us” on the national lottery website takes one directly to the Camelot website.

One might ask how grants of money raised from private individuals by a private firm can be classified as state aid. Did Ofgem check whether the grants were subject to state aid rules before the scheme was launched? What legal advice was taken? If it was taken, it would have been adverse; was any thought given to contesting the matter?

There are also more specific questions that I would respectfully ask the Department to address. Is it satisfied that Ofgem has correctly interpreted the policy directions that it was given? Will it conduct a detailed review of how the change in policy was communicated to interested parties? When exactly were Ofgem, the Big Lottery Fund, licensed suppliers and parish councils or other grant recipients notified? How were they notified? Was any effort made to ensure that they received and understood the notification? Was any attempt made to offer redress for the misleading way in which local committees have been treated? Simply and crucially, will the Department ensure that someone—a named individual—takes responsibility for what has happened?

This issue has caused huge confusion, concern and cost to local people in my constituency. Neither Clifford nor Moccas would have entered into the contracts if they had known that the funding or the feed-in tariffs would subsequently be withdrawn, and if they are withdrawn, both will struggle to maintain the viability of their village hall. The financial well-being of a local school—an eco-school, no less—hangs in the balance. It is not the villages that have changed their minds; it is the Department that has done so.

There are not many of these schemes across the UK. I ask the Government to consider forgiving the debts altogether. That will not mend the harm that has been caused, but it will at least redress the balance, and it would be in accord with natural justice.