Critics including Greenpeace UK say proposals affecting solar panels and
wind turbines make a mockery of David Cameron’s claims to climate leadership
Terry Macalister and Emma Howard
The government has shocked the renewable energy industry by proposing a
massive hike in VAT on solar panels and wind turbines from next summer.
The moves, announced by the revenue and customs authority, HMRC, made “a
mockery of (David) Cameron’s claims to climate leadership” say critics and
come amid proposed cuts of almost 90% in some solar subsidies.
HMRC blamed the planned increase in VAT from 5-20% on a European commission
ruling covering energy saving materials used in the construction trade and
said the EC decision had been upheld by the court of justice of the EU.
But the UK tax authorities stoked anger within the industry by claiming the
changes would do little damage. “The measure is likely to affect fewer than
500,000 individuals and households and the impact … is anticipated to be
negligible,” it wrote in a consultation document released on Wednesday.
The Solar Trade Association (STA), lobby group for the photovoltaic sector,
said it was an astonishing and avoidable blow that could add £900 to a
typical domestic rooftop installation and would only serve to suck even
more potential investment from low carbon power.
‘As countries are racing to secure the new global climate agreement, the UK
has just proposed quadrupling VAT on solar installations for people’s homes
to 20%, while oil heating, coal and gas remain on 5%. The International
Energy Agency is in Paris right now calling for an end to fossil fuels
subsidies just as the Treasury proposes tilting the playing field here away
from clean power for British households,”
“This is clearly absurd. We will be strongly urging the Treasury to treat
solar the same as they propose for oil, gas, heat pumps and biomass
boilers. But it is incredible to have to argue for even level VAT treatment
for solar VAT just as the Paris conference demands greatly accelerated
action to avoid dangerous climate change.”
The solar industry is already nervous as it waits to hear next week whether
ministers will proceed with a swath of cuts to the feed in tariff subsidies.
The STA said it was hopeful ministers would reach a compromise but remained
concerned thatthe cuts could still be too heavy to save a sector reeling
from thousands of redundancies as business confidence evaporates.
Greenpeace said the government should be resisting any misguided
regulations from Brussels at a time when it was pushing for lower carbon
emissions at the UN climate change talks.
“A vital part of the sustainable energy future being championed in Paris
today is being undermined in London by changes to VAT that must be
resisted,” said Doug Parr, chief scientist at Greenpeace UK.
“In addition to the confusion created by dramatic cuts to solar support,
this creates a new round of uncertainty for business, and more expense for
homeowners who are seeking to do their bit for the climate, as loudly
requested by David Cameron last week. This move makes a mockery of
Cameron’s claims to climate leadership, and shows once again that is
Osborne who is ultimately holding the reins on energy policy in the UK.”
Leo Murray, a campaigner for the 10:10 climate change charity, added: “Our
government promised to fight this. Something very wrong is going on with
the EU tax system when short haul flights are zero rated for VAT meanwhile
people who are trying to do the right thing by generating their own energy
are being massively penalised for buying products that are absolutely
essential to meeting legally binding targets on renewable energy and our
climate change objectives.”
Critics want to know why some technologies such as insulation,
draft-proofing, central heating and biomass boilers will not be affected by
the change and yet wind and solar seem to have been singled out.
They suggest the government can avoid VAT increases if it shows that the
solar panels or wind turbines are being used as part of a wider strategy to
beat fuel poverty.
A spokesman for HMRC said the British tax authorities had done all they
could by arguing in court for a different outcome. “We lost the case. We
cannot appeal or go any further so we have to make changes to the rules to
comply with European law.”
A government spokesperson said: “The government remains committed to
improving UK homes to help tackle fuel poverty and keep energy bills low.
Despite the EU’s ruling, we will continue to help the most vulnerable, such
as the elderly, with the installation of energy saving materials, by
retaining the vast majority of the relief on energy saving materials.”
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