posted by Malachi Chadwick

cuts: a matter of choice

Ministers claim there's no alternative to their plan to abruptly slash the Feed-in tariff, but this is really a test of where their priorities lie

Solar panels being installed on a house in Sussex

Earlier this week, the government announced plans for massive cuts to the Feed-in tariff, a popular incentive scheme that pays solar panel owners for each unit of power that they generate.

This isn't a completely done deal – the government is consulting on the plans until late December, but the way it's been announced has got people bracing for the worst.

The Feed-in tariff (often shortened to Fit) certainly isn't perfect, but it's been incredibly successful at getting panels on roofs. This doesn't just help people reduce their utility bills and carbon emissions – there's plenty of anecdotal evidence that seeing the panels in action (and reaping the rewards) can change the way people think about energy, and makes them more likely to make climate-friendly choices in other areas of their lives.

Pretty much everyone agrees that the rates need to come down as installation costs fall – that's how subsidies are supposed to work. Even the solar industry is pushing for a gradual reduction in line with falling installation costs.

But cutting so far and so fast will put thousands of solar workers out of a job and pull the rug out from under small community groups that have already poured time and effort into their projects, but don't stand a chance of meeting the new deadline.

We just heard from Brighton Energy Cooperative, which was due to start selling shares on Wednesday but has been forced to put the entire project on hold until further notice. A few hours later, Reading Council – our partners on the Solar Schools project – announced that they'd be drastically scaling back their own school solar programme. These are the first examples to emerge – they won't be the last.

Cutting so far and so fast will put thousands of solar workers out of a job and pull the rug out from under small community groups that don't stand a chance of meeting the new deadline.

If the proposals do end up being adopted, it's also likely to be the end of 'free' solar schemes, where companies offer solar rigs to households at low or no cost in exchange for the Fit payments. Killing off these schemes will effectively put the benefits of solar power out of reach for poorer families and social housing programmes, who could never afford to buy the panels outright at current prices. 

This isn't just unfair; it defeats the whole purpose of the scheme.

The government argues that without drastic cuts, the scheme would run out of money completely in the next few months, forcing them to close it to new applicants until around 2015. They claim, therefore, that slashing rates was the least-bad option under the circumstances.

But this ignores the fact that these circumstances are entirely of their own making. Here's why...

Early warnings

First off, the government has mishandled the whole Fit process – running four reviews in 12 months, ignoring expert advice and getting tangled up in constant delays. 

Anyone with access to the numbers could have warned them that the budget was running out – the Guardian was writing about this back in early June. So why leave it another six months before doing anything?

And even now, things are still in disarray – the government's consultation closes on 23 December – 11 days after the changes are due to take effect. As many people have already pointed out, it's difficult to have faith in a consultation that looks like such an afterthought.

When is a budget not a budget?

But while all this is frustrating, the real issue is the government's suggestion that it had no choice on the matter. To understand why this isn't the case, we need to take a quick detour into the finer points of Fit funding. Hold tight.

The real issue is the government's suggestion that it had no choice on the matter.

Unlike other government programmes, the Fit isn't funded from general taxation – the costs are covered by a levy on energy bills. When the previous Labour government was designing the scheme, they came up with an estimate of how much it would cost, and planned to revisit this figure once they had some proper take-up data.

When the coalition came into power and kicked off the spending review, they took this estimate, cut it by 10% and set that as the overall budget for the whole programme. It's not clear why the scheme was included in the spending review at all, since it isn't funded directly by the treasury and doesn't increase the deficit; but whatever the reason, it means that the whole idea of a Fit 'budget' is an invention of this government.

Decisions, decisions

In other words, the government had two options:

Option one: Make a drastic and more-or-less immediate cut to Fit payments that would seriously harm the solar industry and put the benefits of solar power out of reach for millions of people.

Option two: Find some extra money to fund a gradual draw-down of the payments, allowing everyone involved to adjust gradually.

Decisions like this are really just a question of priorities. As the recent reintroduction of weekly bin collections shows, if a government really wants to do something it will always find the money for it.

Decisions like this are really just a question of priorities – if a government really wants to do something, it will always find the money for it.

The government rules out option two because it would put pressure on consumers' energy bills. They're right to be concerned about rising bills, and people have argued convincingly that because the current arrangement is effectively a flat tax on energy usage, it would be fairer to fund carbon cuts direct from the treasury.

But in any case the impact of the Feed-in tariff is tiny compared to spiralling gas prices and energy companies' profits – improvements to the Green Deal scheme or lower tariffs for lower energy users would go much further to tackle fuel poverty.

And even if we rule out any bill increases, there are plenty of other ways to meet the cost – from a direct levy on energy company profits, to reallocating money from other programmes that have underspent. And yet it recently emerged that climate minister Chris Huhne never even asked the treasury whether they could provide emergency funding to allow the cuts to be phased in gradually.

The real measure of a government lies in the choices it makes when there's no easy option. Ministers need to ask themselves: when all is said and done, will these cuts bring us closer to a truly low-carbon economy, or push it further over the horizon?

Any government that wants to be remembered as the "greenest ever" must put this question at the heart of every decision, starting with this one.


Tell us your solar story

We want to hear your views on the announcement and get a feel for how 10:10ers are being affected by the whole Feed-in tariff saga.

There are still a lot of unanswered questions and missing details here, so we’ll be keeping an eye on this story as the dust settles and things get a bit clearer over the next few days.

Once we’ve pinned down the details, we’ll also be putting together a full response with help from the 10:10 community.

If you want to share your views or experiences, you can get in touch via email ([email protected]), Facebook and Twitter.