Up to 50 backbench Tory MPs are set to vote against a 15% hike in VAT on solar PV power systems which the British government is obliged to impose to comply with EU directives – putting the issue right at the heart of referendum on British Independence from the EU.
Parliamentarians of all parties, in both the Lords and the Commons, have objected to the government’s treatment of solar power.
Labour has tabled an amendment to the Finance Bill which would prevent a damaging potential VAT rise on domestic solar systems in future, which will be voted on next week (22 March).
The Solar Trade Association was braced for a 20% hike in VAT on domestic solar in the budget yesterday, but, while the budget was silent on the issue, the STA has been advised the decision has been postponed and could happen at any time before Autumn.
Now, dozens of Tory MPs are set to rebel in support of preventing the solar VAT hike. The STA has urged the Chancellor to stand up to the European Commission and not to go ahead with tax hikes that would see households installing solar power taxed at 20%, while fossil fuels remained at 5%.
This outcome would be ‘perverse’ given EU and UK commitments on climate change and ending fossil subsidies.
Last night Members of the House of Lords won a vote against the Government’s Renewables Obligation Closure Order, which closes key support for solar up to 5MW in size from next month.
The vote – on a motion tabled by Baroness Featherstone – has no legal power, but sends a clear signal of unhappiness from the Lords with Government policy, applying pressure on Government to reconsider their actions.
Paul Barwell, Chief Executive, Solar Trade Association, commented: “Parliament is right to recognise a serious problem with the Government’s treatment of solar power, which had been the major clean energy success story of the last Parliament.
“Of course we understand there needs to be good cost control, and we are very happy to work with Government to achieve that. But Government has gone to extremes; slashing support under the Feed in Tariff by 64% for rooftop solar and removing all support for larger projects from this April, leaving much of the industry in limbo.
“There is now huge consensus across the energy industry, both at home and internationally, that solar sits at the heart of a modern power system – it makes no sense to limit the UK stake in a powerful technology that even Shell believes will form the backbone of the world’s future power supply.”
The Government’s closure of the Renewables Obligation in April would leave all solar in the UK over 1MW in size with no viable support. The Solar Trade Association has calculated that the Government will be spending just 1% of all support for low-carbon power (under the Levy Control Framework) over the next three years on solar via its one remaining support scheme – the Feed-In Tariff.
With solar power the cheapest major renewable power – and the most popular – the marginalisation of solar has left a previously successful industry facing huge risk and uncertainty while leaving energy bill payers paying for more expensive alternatives.