The government has lost its appeal against a judge's ruling that its cuts to solar power subsidies were illegal, suggesting thousands of homes and businesses will now be able to claim the higher payments.
Three court of appeal judges unanimously rejected the appeal from Chris Huhne, the secretary of state at the Department of Energy and Climate Change (DECC), who said he would be taking the case on to the supreme court. "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," he said.
The decision to prolong the uncertainty that has seen the number of solar panel installations fall since 12 December and was immediately condemned by opponents of the cuts. Green party MP Caroline Lucas said: "Having lost twice in the courts and been roundly humiliated over the shambolic handling of solar policy, it is absolutely beggars belief that Huhne is planning to appeal to the supreme court."
The government announced proposed cuts to the solar feed-in tariff payments in October but in December, a high court judge ruled that the government's handling of the cuts was "legally flawed", after a challenge by a coalition of solar installation companies and Friends of the Earth.
On 19 January, the government said that if it lost the legal case, it would fund the higher rate payments for any panels installed by 3 March, which would affect about 3,700 homes and businesses. A DECC spokeswoman said: "We totally appreciate the uncertainty in the solar industry and hopefully the 3 March date will provide some certainty."
DECC's legal fees have cost taxpayers £58,000 so far, though this does not include the costs of their opponents, which the appeal court said DECC must also pay.
The court of appeal refused permission for Huhne to seek a hearing in the supreme court, but this does not prevent the secretary of state going directly to the higher court. He has 28 days to lodge permission to appeal. Some campaigners have suggested this continued uncertainty may reduce the number of new installations, and therefore reduce the number eligible for the higher feed-in-tariff if the government ultimately loses its case.
John Cridland, director-general of the CBI, said: "The judgment should be used to draw a line under this saga, which saw the government scoring a spectacular own goal."
Gaynor Hartnell, chief executive of the Renewable Energy Association, said the rejection of the appeal prevented a precedent being set which would allowed the government to make retrospective policy changes in future. "The government is well aware that it would be incredibly unwise to reduce payments to renewable energy producers after they had commissioned their projects, as it knows what immense damage that would do," she said.
The judgment stated: "The question [is] whether parliament conferred a power [to DECC] to make a modification with such a retrospective effect. It did not."
The cuts proposed in October – from 43.3p per kWh of energy generated to 21p – prompted a furious backlash, with the main complaint being the speed of the changes, which were designed to come into effect just six weeks later, on 12 December. Critics also drew attention to the fact that the consultation did not end until 23 December – over a week after the changes were proposed to take place.
In December, a cross-party group of MPs said in a strongly worded report that the reductions were "clumsily handled", had threatened jobs and could have dealt a fatal blow to the scheme, because the changes required homes to meet the C-rated energy efficiency standard before becoming eligible for the solar feed-in tariff.
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