Rumours have continued to circulate as to what might – and might not – feature in chancellor George Osborne’s spending review in two weeks’ time, and government departments are bracing for impact.
Wednesday 25 November 2015 looks set to be a pivotal day for the solar industry. Osborne will release his autumn statement at the same time as a spending review of the government itself, organised by the Office of Budget Responsibility. The two documents will effectively outline not just how the government intends to run the country for the next five months, but how it will run itself.
The autumn statement is to be released against a backdrop of considerable uncertainty in the renewables sector. Subsidies and support frameworks have been cut without replacement and a consultation on the future of the feed-in tariff, which prompted a mammoth 54,000 responses, closed in late October.
DECC’s FiT team suggested to participants in workshops that a response could be ready by late November or early December, but it’s not yet known whether or not this timeline has slipped given the sheer weight of public response to the consultation.
Energy secretary Amber Rudd and minister Andrea Leadsom have thrown numerous hints that the policy pipeline DECC has been carefully constructing since the Conservative Party’s general election victory in May would come onstream alongside the autumn statement. A replacement for the Green Deal is expected first and foremost, as are more concrete commitments to energy efficiency measures.
But what for the FiT? An 87% cut to the tariff and deployment caps limiting FiT spending to £100 million at the very most would cause significant shrinking of the solar industry. Numerous reports have urged the government to rethink the strategy and outlined various alternatives, most of which focus around a more lucrative feed-in tariff spread less thinly. Stories of a 4p FiT have indeed been doing the rounds but it remains to be seen whether or not DECC would be willing – or able – to stretch to such a rate. A possible storage incentive would too be greatly received and would certainly tally with the government’s current demand side reduction fascination.
Central to any relaxation or so-called ‘rescue package’ will be the apparent surprise within Whitehall at just how the public has reacted to the proposals. The response has been forthright and unabating. National broadsheets have picked up the themes and ran with them, campaign groups have organised headline-grabbing publicity stunts outside DECC HQ and statisticians and policy analysts have poured the department’s impact assessment to pick apart every little detail.
All the while, Osborne has been drawing up his own plans. This month’s autumn statement and spending review will be the first real opportunity for the chance to align departmental and public spend with his Conservative Party mantra.
Two weeks prior to the release and some government bodies have submitted before Osborne’s even had the chance to swing his axe. Defra, DCLG, DfT and the Treasury have accepted spending cuts of 30% over the next four years at an average of 8% per year, to be achieved by “further efficiencies in departments” (read: redundancies), “closing low value programmes” (read: anything that isn’t top priority) and “focusing on our priorities as a country” (read: cutting the deficit as quickly as possible, by any means necessary). Westminster’s turkeys are well and truly voting for Christmas.
DECC would appear a prime target for some Osborne-enforced fine tuning. It might be one of the more efficient departments in parliament but it was one of a very select number to actually increase its headcount over the last parliament. With the RO closed, the FiT being phased out and CfDs seemingly culled, there could be some hefty fat to trim.
Rumours of DECC’s abolishment or merger with other departments – most commonly Business, Innovation and Skills, Defra or both – are not exactly new but have continued to rear their head. In September Conservative MP Peter Bone asked Rudd outright to comment on speculation suggesting DECC could be axed, to which she refused. Bone does have a history with DECC, his motion for it to be abolished was recently heard in parliament.
Given Osborne’s recent track record on renewables, not to mention the apparent outsourcing of big-picture energy policy to the National Infrastructure Commission, it would come as no surprise if DECC was to be substantially trimmed later this month. What the rest of the world would think of such a decision when it congregates in Paris in a few weeks remains to be seen.