Parliament might have risen for recess late last month, but the ministerial holiday may not have been well received by the likes of Greg Clark, Baroness Neville-Rolfe and Jesse Norman. They could be sunning themselves on a beach somewhere but, given the sheer amount of work the department must soon scale, I dare say their minds might just be wondering back to Whitehall.
And it’s for this reason that merging the business and energy departments could prove to be a wise move on Theresa May’s part. David Cameron’s Conservative government started a complete overhaul of the business energy efficiency landscape and the now-defunct Department of Energy and Climate Change has left it very much in BEIS’ to-do pile.
The reforms were first teased in George Osborne’s first budget as chancellor of a majority Tory government last summer before beginning in earnest last September with the launch of a consultation on the future of energy efficiency and carbon reporting. That consultation fed into Osborne’s announcement this spring that the Carbon Reduction Commitment is to be abolished from the 2018/19 reporting year.
Since then however, details have been scant. Businesses know that taxation under the Climate Change Levy is to rise to compensate for the loss of CRC, but exactly how the streamlining of the business carbon tax landscape will work in practice – and what shape the energy and carbon reporting framework will take in the future – has not been disclosed or even formalised.
A consultation is in the pipeline but is said to have been delayed by various other goings on at government level that left DECC a little preoccupied. Who’s got time to allay the fears of thousands of UK businesses when you’re deciding how to tell international governments that you’re having second thoughts about multi-billion-pound infrastructure projects you’d promised they could build?
The problem now is that the CRC replacement framework is just one element of a significant business efficiency policy logjam at BEIS that is only being added to. The results of a Call for Evidence on battery storage technologies could have significant repercussions for corporate customers, while just how the Brexit vote will impact on the Energy Savings Opportunity Scheme – a vital scheme, but EU legislation all the same – must also be clarified. Businesses, particularly manufacturers, could also be significantly hampered by proposed changes to embedded benefits.
It’s for this reason that BEIS could probably have done without yet another policy-related email marked ‘URGENT’ dropping into its inbox, but that’s precisely what HMRC and the Valuation Office Agency has sent it. And just weeks before the summer holidays – have they no understanding of office etiquette?
A revaluation of business rates attached to solar PV installations, as warned by the Solar Trade Association earlier this summer, could now place at risk the economics of many an on-site generation install. A potential rateable value increase from circa £8 per kWh to as much as £61/kWh is on the cards, a whopping eight-fold increase.
In essence, if you’re a business that owns a solar installation outright, the business rates you pay for what revenue it generates are set to increase by as much as 600%.
Such a rise owes a lot to frankly outdated legislation. The last time rateable values for such technologies were discussed was before solar was even widely available and, as a result, the legislation is ill-suited to it.
The cogs of government are, unfortunately, difficult to stop when they’re in motion however. The VOA’s hands are tied and a revaluation must take place under very specific remits. One solar installer described the increase as “yet another unfortunate coincidence of the big government machine”, and that’s it in a nutshell.
It’s a government machination that, unfortunately, only government can now prevent. The STA has laid its battle lines and is calling on installers and businesses alike to contact their local MPs and request that BEIS ministers lay a statutory instrument to prevent the increase from taking place.
“We are pretty confident that Ministers will be keen to scotch the proposed shock business rate rise when the problem is appreciated. The extra challenge at the moment is communicating with a Government and an energy department in a state of transition but we are already talking to officials and advisers across lots of departments.
“However, seeing this threat off quickly depends on swift action by the industry. We strongly urge every solar company to contact their MP as soon as possible,” Leonie Greene, head of external affairs at the STA, said.
Contrary to what Barry Gardiner might have said, Clean Energy News understands that civil servants within BEIS are well aware of the situation and work is continuing, but with the new department’s to-do list being added to at an alarming rate – and the VOA primed to send valuation letters out at the end of next month – it’s a situation that could become very costly, very quickly and can only be addressed through top-level intervention.
And you thought you were coming back from your summer holiday with a bulging inbox…
