‘Extremely damaging’ community energy tax relief u-turn to have ‘devastating effect’

The government’s “extremely disappointing and damaging” decision to remove tax relief for community energy projects will have a “devastating effect” on the sector, critics have said.

Amendments to the Treasury’s latest Finance Bill, published by the government on Monday evening, plan to remove EIS, SEIS and SITR tax relief measures for community energy projects as of 30 November, meaning that all shares in such developments issued after that date will not be eligible for the relief.

The change comes amidst a slew of policy changes that have already beset the community energy sector and have been roundly criticised.

Philip Wolfe, chairman at Community Energy England, told Solar Power Portal that the change added to a “steeply increasing political risk” which now “endangers all new investment in the energy sector”.

“It’s hard to believe Treasury doesn’t understand that all these policy reversals will have a devastating effect on investor confidence, way beyond those who are directly affected.

“This latest policy change is arguably even more damaging than the recent DECC announcements; Treasury appears to have attempted to bury its volte-face – in a late parliamentary amendment – without any consultation, impact assessment or ministerial statement,” he added.

And Wolfe’s sentiments were echoed by Co-operatives UK policy officer James Wright, who attacked how the measures had appeared to have been sneaked in.

“It is extremely disappointing and damaging for government to have moved the goalposts for these businesses so suddenly and dramatically by slipping the measure in by stealth.

"We will be seeking an explanation from HM Treasury as to why it has changed its mind about the social impact of community energy, and how it justifies implementing policy for business in this way,” Wright added.

Speaking to Solar Power Portal yesterday, Jan-Willem Bode criticised how the measures had been taken despite repeated assurances from civil servants in “various government departments” that community energy projects would be spared such cuts until SITR had been in place.

Wright also spoke of receiving assurances from within government, adding that the changes were a “complete reversal” of announcements made both within the 2014 Autumn Statement and 2015 Budget.

“We had expected that an expanded SITR would be opened to community energy schemes while EIS would continue for six months after changes to SITR gained State Aid approval.

"Given that we fought so hard last year to secure continued support for community investment in renewables, including providing clear evidence of just how important it is, and have been given numerous assurances from government, this is a really heavy blow for our members, and for us at Co-operatives UK,” Wright added.