The government has been accused of falling short on renewables in its Autumn Statement, with an overall air of disappointment among key industry figures, particularly as The Department of Energy and Climate Change’s core budget has been slashed by 22 per cent for 2019-20, with the potential of 200 staff being made redundant.
The RHI scheme will see its funding rise to £1.15bn in 2021 – however, this is still around £690m lower than what was originally forecast.
Nina Skorupska of the Renewable Energy Association, commented; “Our members recognised the need to make savings and presented to Treasury and DECC how we could optimise the RHI budget. A £700m cut is large, but we look forward to working with the government on reforming this crucial area.”
Enterprise Investment Scheme (EIS)
It was confirmed that energy would be excluded from the Enterprise Investment Scheme (EIS), the Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trusts and that community energy will no longer get tax-advantaged venture capital and Social Investment Tax Relief (SITR). This was expected, however.
Enhanced Capital Allowances
The Solar Trade Association (STA) had been calling for Enhanced Capital Allowances of 100 per cent in the first years for a project, as is the case for fossil fuels and energy from waste heat. Solar is currently discriminated against under Capital Allowances, where 18% of expenditure can be taken as a tax deduction for general plant and machinery, including for wind, yet solar receives just an 8% allowance. The Autumn Statement announced only that businesses in certain Enterprise Zones will be able to claim 100% Enhanced Capital Allowances.
Leonie Green of the STA explained: “something has gone very wrong when solar is actively discriminated against in the tax systems compared to fossil generation. New large-scale solar currently has no public support. As an absolute minimum solar projects should receive the same tax benefits as other energy technologies such as oil, gas and energy from waste.
It had been hoped for further announcements or support would be touched on with regards to:
- extending the Real Estate Investment Trusts (REITs) to solar power
- clarity on the Levey Control Framework post-2020
- more detail on the National Infrastructure Commission’s role
- more detail on the Business Efficiency Tax Review giving support to solar investment in the commercial sector in next year’s budget.
Despite all of this, the Chancellor claimed that investment in renewables and low-carbon would apparently double to 2020 but the STA feel these assumptions are unclear, as the Feed-in Tariff is facing a 98 per cent cut in expenditure to just £7m over three years.
More widely, there were some positive reactions on some aspects of the Statement from the construction industry. This includes:
- extending the small business rate-relief scheme for an additional year
- doubling the housing budget and the promise of 400,000 new homes
- the apprenticeship Levy being paid on payrolls in excess of £3 million, which means that less than 2 per cent of UK employers will pay this.