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

Lord Bourne of Aberystwyth Excerpts

Tuesday 2nd February 2016 Lords Chamber

[Noble Lords]

Minister!

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, this has been a very wide-ranging debate, which has interested the whole House, and there have been differences within parties as well as across the Floor of the House.

The Government are committed to cost-effective decarbonisation of the United Kingdom’s electricity supply—let me nail that straight at the start. In recent years, we have made huge progress in encouraging the development and deployment of renewable energy and in building a successful renewables industry. The feed-in tariff, or FIT, scheme has been a vital part of this. The FIT scheme now supports more than 830,000 small-scale renewable installations—a figure far in excess of what we expected to deploy when the scheme was first set up.

In 2010, when the FIT scheme was set up, the then Government estimated that it would cost £490 million per year in 2020. That was the estimate. Without the changes that we are seeking to introduce today, we estimate that by 2020 it would cost £1,740 million per year; with the changes, it will still cost £1,300 million per year. Let me just repeat that: £1,300 million per year. There has been a slight tendency in the debate to suggest that the Government are walking away from the renewables sector and not spending anything on FITs, but we will be spending £1,300 million per year, via the LCF. Of course it is not direct—it is via the levy control framework—but it is still a cost for bill payers. We need to establish that at the start.

The noble Baroness, in opening the debate, quite fairly said that subsidies must end—that nobody wants subsidies and that we must do this in a controlled way. I agree, but she did not then suggest how we should do it; she just opposed everything that we were seeking to do. It is a mode of proceeding, but if you are going to be taken seriously about ending subsidies, you should suggest how you are going to do it.

We have of course also made changes as a result of the consultation. The Government were elected with a clear manifesto commitment to keep bills as low as possible as well as to decarbonise. It is a judgment call, and we have been criticised from both sides, by those who think we should not be doing anything at all and by those who think that we should be doing more for the renewables sector. Clearly, the more you increase the subsidy, the more will be deployed. The noble Baroness suggested during her speech that renewables were cheaper than conventional forms of electricity. That is not remotely true. If it were true, we would not need to do anything at all. It was David Attenborough who said that as soon as you have the cost of renewables below the cost of fossil fuels, the problem goes away. We are not at that stage: if we were, we would not need to be doing what we are doing in terms of continuing a subsidy.

What we are doing is responsible. If this order were annulled, we would have to consider closing the scheme altogether, so I welcome the stance taken by the opposition Labour Party on this—I know it is not happy with what we are doing but the right course of action is to regret this rather than to seek, any time there is a policy you do not like, to overturn it by voting strength. That is not what this House should be about. I will say no more about that, but it really is not the right way to proceed.

In response to the noble Lord, Lord Grantchester, who asked why we are bringing it forward in this way, nobody at the start of this Parliament could have foreseen that we would be in this position of having votes all the while against government policies which were being lost in a way that has not happened previously—at least not on this scale, as he himself indicated. I was grateful for what he said on that.

We have listened carefully to the views of industry in the consultation—in particular, the Solar Trade Association’s £1 plan—and took account of its responses in redesigning our scheme. We revised tariffs upwards to reflect evidence that it provided, we allocated more budget to solar under the £100 million cap to reflect its asks and we are implementing a cap system which allows us to recycle underspend and consider the balance of caps between years.