Labour launches campaign against ‘solar tax hike’

Labour has stepped up its pressure on the government over proposed increases in business rates taxation on solar installations and launched a campaign against the plans.

Returning to parliament this week following the summer recess, Labour shadow energy secretary Barry Gardiner has rallied other MPs to campaign alongside businesses and industry bodies against increases on rateable value attributed to solar.

Meanwhile, the government has continued to decline opportunities to comment on the issue or make clear where responsibilty lies for the policy. A spokesperson for the Department for Business, Energy and Industrial Strategy (BEIS) would not be drawn on its involvement in the policy, calling it a "cross government issue" which the Treasury is leading.

Despite a number of attempts by Solar Power Portal, HMT failed to provide any response to Labour's new campiagn or questions over the controversial policy plans at the time of publication.

In July the Solar Trade Association learned that this is scheduled to rise by six to eight times the current level under an ongoing review by the Valuation Office Agency.

The increase would hit existing installations on commercial properties if not owned by a third party and in some cases send installations into negative returns.

Gardiner said: “It is a serious act of bad faith for ministers to press ahead with a huge tax hike on businesses that are doing the right thing by generating their own clean energy.

“Businesses made their investments in clean technology as a sound financial decision. They did not expect the government retrospectively to classify their investment so as to subject it to eight times the level of tax. This will cost some businesses more than the value of the energy they are saving and they will be forced to rip these solar panels off their rooftops.”

Among those set to be hit with the changes are state schools, which according to climate change charity 10:10 will see bills increase by more than £800 when the new rates are introduced in April 2017.

Private schools, academies and free schools will be exempt from the changes due to their charitable status however those remaining. For state institutions with a 10kWp system, 10:10 estimates an added cost of £823.35 in business rates.

If introduced, the proposals would be the latest in a string of policy changes by government to severely impact the UK solar market. Following cuts to feed-in tariff rates earlier this year, a survey by the STA and big four consultancy PwC found that the industry had shrunk by around a third after up to 12,500 jobs were lost.

10:10 claims schools that installed systems before the tariff cuts were still hoping to be able to pay back the cost of the panels in up to eight years. If the changes to business rates go ahead, it estimates payback will take upwards of ten years.

For schools planning to go solar this year, despite the cuts, they believe the new tax hike would reduce the lifetime return of the panels to near zero. They might even make a negative return

Samantha Williams, head teacher at Middleton Primary School in Leeds, said: “The changes to the feed-in tariff were bad enough but the new business rates being thrown into the mix too will stop schools in their tracks and punish those around the country who have already done the right thing and installed."

Cecily Spelling, Solar Schools project manager for 10:10, added: "This new tax hike is just nonsensical. It’s punishing those that have already installed solar and discouraging more in the future.”

Commenting on the impact on schools, Gardiner said: “This latest change is desperately poorly thought through and must be paused to allow for proper scrutiny. And the discriminatory way in which state schools will be hit whilst private schools are exempt is simply outrageous.”

Labour intends to work closely with the STA and 10:10 to call for the tax hike to be paused and brought forward for proper scrutiny.