Levy Control Framework overspend claims ‘bogus’, Ed Davey says

Former energy secretary Ed Davey has claimed that the Conservative government’s claims of an overspend within the Levy Control Framework (LCF) are “bogus”.

Speaking at an event hosted by the Institute for Public Policy Research (IPPR) on Wednesday, Davey criticised the current government’s attitude to the LCF and the headroom with which it was provided.

Davey’s successor Amber Rudd has repeatedly stressed the need to control subsidy expenditure since taking the position with the LCF forecast to hit the cap of its headroom and stand at £9.1 billion by 2020/21.

However Davey has said the headroom was administered for a reason and that if just one or two of the larger projects were to not go ahead, the LCF would actually record an underspend.

He added that he would be happy to provide evidence for a select committee inquiry into the overspend and labelled some of the fund’s criticism as “complete and utter nonsense”.

Responding to a question on the LCF’s future, Davey also said that the LCF has an “important role to play” due to its ability to ensure that businesses and high-energy users “pay their share” while protecting poorer households.

Davey’s comments come just days after analysis conducted by Good Energy revealed that the overspend within the LCF might not even be a reality if the Merit Order Effect is applied, claiming that subsidy expenditure for onshore wind and solar could be almost two-thirds lower than currently stated.

However Davey’s strongest criticism was perhaps reserved for chancellor George Osborne, who he said was “not a friend of this [green] agenda” and was guilty of a “fundamental misreading of the data and economics” attached to renewable energy support frameworks.

Davey also spoke candidly about the future of the Department of Energy and Climate Change. The department has been rumoured to have an uncertain future and speculation persists that it could be rolled into the Department for Business, Innovation and Skills (BIS) in the near future.

Davey spoke of his concern for job losses at DECC which, among other departments has been tasked with finding spending cuts of up to 40% ahead of an autumn spending review, adding his view that the department “stimulates more private investment than probably any other”.