Chancellor misses opportunity to scrap solar tax hike and boost investment

Paul Barwell

Paul Barwell

The chancellor, Philip Hammond MP, made no mention of climate change, the Paris Agreement, or renewable energy in his Autumn Statement on November 23.

Speaking in Parliament, the chancellor reconfirmed his government’s commitment to tax breaks for oil and gas firms, to drive investment in those areas. However, there was no mention of removing the proposed business rates increase for commercial solar installations. The Solar Trade Association (STA) believes only modest interventions are needed, including dropping the business rates hike, to unlock £1 billion of investment in solar over this Parliament.

Paul Barwell, STA CEO, said: “We welcome the additional funding for infrastructure and electric vehicles – a “smart” energy system will deliver enormous savings to business and consumers. It is also good news that there is no cut to the Carbon Price support, and we look forward to working with the government over its emissions reduction plan and the future of the Levy Control Framework. However, proposed business rate rises risk undermining an industry that is already adjusting to a low-support framework, and will make many systems uneconomical.”

The STA has been urging the government to drop the solar tax hike for many months. The new business rates, due to be implemented in April 2017, will mean that companies and public sector buildings that supply themselves with solar power will see business rates on those installations increase six to eight fold. This rate rise will not affect installations deemed “mainly export” where over half the energy is sold to a third party. Bizarrely, this will mean companies with identical solar schemes could face an 11-fold difference in business rates payable on solar next year depending on ownership structure.

Leonie Greene, STA head of external affairs, said: “Only the week after the UK ratified the Paris Agreement, the chancellor made no mention of climate change. It is deeply frustrating at this point in time that we have to battle against a tax regime that is rewarding investors in fossil fuels over solar energy. Very modest intervention is needed to unlock a billion of investment in solar over this Parliament. The UK economy, as well as the climate, urgently needs this investment.”