Westminster Blog

This morning’s legal decision against Chris Huhne’s department, DECC, may serve as a welcome distraction for the energy secretary given his other thorny issue.

(He is of course awaiting a decision by the Crown Prosecution Service as to whether to prosecute him over allegations that he asked his former wife to take speeding points on his behalf.)

Then again it may just add to the pressure on the beleagured Lib Dem cabinet minister.

Solar companies are today celebrating victory over the government after the Court of Appeal upheld an earlier legal decision that recent cuts to household solar subsidies were illegal.

Three Court of Appeal judges ruled that parliament did not have the power to make such a modification “with such a retrospective effect.”

The government must now pay costs for the solar industry and has been refused permission to appeal.

It will also have to pay its original higher subsidy for customers who installed panels between early December and the start of March – a cost which could run into tens of millions of pounds in the long term.

The verdict is in some ways a Pyrrhic victory for the industry as solar subsidies will still be halved as of March 3. But companies which would have seen their subsidies slashed from December 12 have now won a delay of nearly three months.

The solar industry had previously scored a major victory last month in the High Court which ruled that the rushed way the government had introduced the subsidy cuts was illegal.

The case was brought by Friends of the Earth, the environmental group, and the Solarcentury and Homesun solar companies.

Daniel Green, chief executive of HomeSun, said the latest decision was a “decisive ruling”.

“Almost everybody except DECC have appreciated the potential and importance of the solar industry – from The National Trust, the Church of England through to the CBI,” said Mr Green. “Surely this must be the point at which Chris Huhne stops taking the side of the big six energy companies and realize that solar is part of our future.”

“DECC now needs to look at itself in the mirror and raise its game to enable the private sector to deliver on greenest country ever,” said Charles Perry, co-founder of sustainability advisory firm SecondNature.

But a DECC spokeswoman said that the government was still “considering our options” in the wake of the ruling, prompting speculation the government could seek to lodge a second appeal with the Supreme Court.

Mr Huhne said in a statement that DECC still disagreed with the judges.

“We have already put before Parliament changes to the regulations that will bring a 21p rate into effect from April for solar pv installations from 3 March to help reduce the pressure on the budget and provide as much certainty as we can for consumers and industry,” he said. “We want to maximise the number of installations that are possible within the available budget rather than use available money to pay a higher tariff to half the number of installations. Solar PV can have strong and vibrant future in UK and we want a lasting FITs scheme to support that future and jobs in the industry.”

The government first announced in late October that it would slash the amount of money paid to anyone fitting a small solar system after December 12 from 43.3p per kilowatt hour to 21p/kWh.

The government consultation was due to end on December 23 – nearly two weeks after the December 12 cut off date. As a result, the industry was given just six weeks’ notice that its support would be drastically reduced.

John Cridland, director-general of the CBI, said in November that the move was one of several own goals by the government and had undermined industry “trust and confidence” in the government.

The government has argued that it was caught out by the unexpected rush to install panels after the solar cells became much cheaper partly because of low-cost competition from China. Greg Barker, climate change minister, had said the high tariffs were just “not sustainable”.

Although the feed-in tariff subsidies are paid via a small charge on consumers’ electricity bills, not from government coffers, ministers had put a cap on such payments that was in danger of being exceeded.

The new cut-off point of March 3 was introduced last week after Mr Huhne announced a new proposed eligibility date.

In a written statement to parliament, Huhne said this could provide a level of certainty to companies which had been unable to explain to potential customers what level of payments they could expect.