The Environmental Audit and the Energy and Climate Change Committee’s inquiry on solar PV feed-in tariff rates continued yesterday in Westminster. The inquiry took further evidence from Chloe Smith MP, Economic Secretary to the Treasury and Jonathan Mills, Deputy Director, Energy Environment & Agriculture, HM Treasury in an attempt to understand the role that the Treasury played in setting the proposed FiT changes.
Members firstly called into question to what extent the Treasury considered the impact of the FiT cut to jobs within the solar industry and the impact on associated tax revenues. Ms Smith responded that the impact analysis undertaken by DECC assessed both economic and fiscal factors to deduce that the proposed change would have a net benefit to the economy of £9.5 billion. When pressed on the issue of job loss within the industry, Ms Smith outlined that DECC’s figures suggest only 14,000 people are currently employed in the sector, so claims of 25,000 jobs being lost are an exaggeration by the industry.
Ms Smith explained: “If you take action to control an unsustainable stream of spending, yes by all means there are jobs connected with that stream, but there are other areas of the economy which then you expect to benefit… in this case we believe greater than that stream that we are stopping, therefore we are expecting this to have an overall net benefit to the economy.”
Members’ frustrations were seen to boil over when they asked the Treasury to provide the committees with the exact costs of sticking to the April deadline. Ms Smith once more referred to DECC’s impact assessment scenario of ”do nothing” whereby additional lifetime costs are predicted to be £37 billion. Members were quick to point out that no one is proposing to “do nothing”; they are instead proposing a delay in the introduction of the new tariff. Ms Smith’s reply that “each week of delay has a lifetime cost of £275 million” was followed by a comment that the question would be better suited to DECC as the Treasury only holds an overall interest.
Zac Goldsmith, MP for Richmond Park, then launched a scathing attack on DECC and the Treasury, stating: “It’s impossible for us to take a view on this without absolute clarity on the figures – it seems the more we delve into this, the more confusion there is.”
Members’ questioning then proceeded to discussing the reasons behind why the budget for the feed-in tariff was considered public spending. Members made the point that a recent ruling by the European Court decreed money raised for the German feed-in tariff to be outside of the Government’s public spending. It was also noted by the members that the Office for National Statistics (ONS) is yet to give a ruling on whether money raised for the feed-in tariff is included in public spending.
Jonathon Mills responded that, although the Treasury is yet to receive a ruling from the ONS, it regards the FiT scheme as public spending because it is compulsory, unrequited and involves a transfer of resources.
As the allotted time drew to a close, members were eager to encourage more dialogue between DECC and the Treasury and looked for assurances that the predictions for solar PV uptake in the future would more reliable, with Mr Goldsmith labelling the past figures as a “shambles.”
Following the hearings from the panels of witnesses the committee will now discuss the matter privately and publish a report detailing their recommendations for the House of Commons.