If policy can be changed retrospectively, why should business believe that the UK is a safe place to invest?
The high court ruling is a real victory for the solar industry and for those households, businesses and community projects in my constituency who would have been left high and dry by attempts by the Department of Energy and Climate Change (Decc) to apply a retrospective change to the rate.
There has always been widespread acceptance that the tariff would need to be reduced as installation costs fell and economic realities shifted. But the focus of the cross-party and public campaign against the government’s plans has been the speed and scale of the proposed cut, which has already caused huge disruption to the solar industry and the 25,000-plus jobs it has created.
The courts have now twice ruled that these actions were unacceptable. Importantly, the courts have also sought to uphold a key principle about the very nature of government investment policy.
The central question is this: if policy can be changed retrospectively, why should business believe that the UK is a safe place to invest?
Investors need to know whether a government commitment to support them can be trusted, or if retrospective changes can be made at any point after investments start.
A lack of trust is a huge disincentive to invest. The CBI describes the government’s decision to slash subsidies for solar panels as an “own goal”, stating that “moving the goalposts doesn’t just destroy projects and jobs, it creates a mood of uncertainty that puts off investors.”
In light of the court’s decisions and the strong industry calls for certainty, you might expect Decc to want to bring the solar situation to a swift conclusion and do what it can to inspire investor confidence for the future.
But no, Decc has indicated that it intends to stubbornly forge ahead with its ill thought through plans, and take the appeal all the way to the supreme court – wasting time and money in the process.
This means that the many solar PV installers and businesses I have spoken to remain completely in the dark about how they will be affected by the government’s shambolic policy wrangles.
Further, it suggests that Decc doesn’t understand that investors in Britain need to feel confident about the conditions of the market they are entering. They need to know those conditions will not be radically undercut on a political whim.
No wonder we are facing a double-dip recession if this is the message the government is sending out. I thought that Britain was meant to be “open for business”. It seems that some government departments have not read that memo.
The case of solar has implications for all businesses that benefit from any form of governmental support. This could include grants for innovation, research and development, skills training and the establishment of networks.
If the government pursues its solar decision when an entire industry is at stake, why should business believe that government commitments to support research carried out by our universities and colleges will not be withdrawn if market conditions change unexpectedly?
If an appeal is allowed to go ahead, there is a risk that a dangerous precedent will be set.
And while it’s certainly possible to point the finger at the previous Labour government to claim that the solar tariff rates were set too high – that the policy was poorly constructed – it’s clear that, in the here and now, this goes much further than the solar industry.
So we now need to know if the government will accept the high court judgment and fulfil their previous commitments on solar tariffs. Crucially, we also need to know what the implications are for investment security across the whole the UK economy.
Using the courts to try to steam roller through a retrospective policy change that has already been ruled unlawful smacks of total disregard for the industry.
Decc should accept that ministers got it wrong on solar and pull the plug on this legal merry-go-round, which is putting UK jobs and future investment at risk.