Photovoltaic and Battery Storage Systems: VAT

Business, Energy and Industrial Strategy – in the House of Commons on 22nd October 2019.

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Photo of Karen Lee Karen Lee Shadow Minister (Home Office) (Fire)

What assessment her Department has made of the potential effect of changes to VAT for solar on the uptake of photovoltaic and battery storage systems.

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

The hon. Lady will understand that the UK was forced to make these changes to comply with EU legislation. Since the new rates only came into effect on 1 October this year, it is too early to see what effect they have had. Once we have left the EU, we will have opportunities to amend the VAT treatment of low carbon technologies to ensure that we can set the rates that we consider most appropriate.

Photo of Karen Lee Karen Lee Shadow Minister (Home Office) (Fire)

By raising the VAT threshold for solar installations, the Government are disincentivising the transition to green energy, and this is just one example of the Government’s failure to act with the urgency that the climate crisis demands. Will the Minister undertake today to consider adopting Labour’s plans to fit solar panels to 1.75 million low-income homes, which would combat climate change while creating jobs and reducing energy bills for people in Lincoln and across the UK?

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

I did suggest that the VAT increase was part of EU legislation, and that is something we can amend, if we wish to do so, after we have left the EU. Solar is a UK success story. I will not take any lessons from the Labour party about the success of solar: 99% of our solar-generating capacity and over 1 million installations have been deployed since 2010, since the Government took office. This is something that we are proud of, and it will obviously be part of our energy mix as we seek to hit the target of zero carbon emissions in 2050.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

Even given the VAT situation, solar and wind together with battery storage on commercial buildings is pretty much viable without public subsidy. Is not now the right time for a widespread deployment on every public building, including every school, hospital and prison?

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

My hon. Friend makes an excellent observation. We are supporting innovation in this area. We have the Modern Energy Partners programme, which cuts energy costs and carbon emissions across the public sector.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

Any VAT increase would be yet another hammer blow to solar. The Minister’s predecessors took solar power to the brink, blocked onshore wind, cut support for offshore wind and failed to capitalise on Scotland’s lead in marine and tidal power. Has he compared the detail in the Scottish Government’s new green deal with the lack of detail in the Queen’s Speech? When will his Government wake up to the climate emergency?

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

As I have said a number of times, the VAT increase was a consequence of EU membership, so on that basis I recommend that the hon. Gentleman support the European Union (Withdrawal Agreement) Bill this evening.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Business, Energy and Industrial Strategy)

Last month’s energy auction revealed that offshore wind is a third cheaper than gas and half the price of the energy from Hinkley C nuclear plant, yet Tory dogma is holding climate change mitigation back. Does the Minister agree that VAT on solar is yet another barrier to much needed change, and will he ask the Chancellor to rule that out in the Budget?

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

I very much appreciate the hon. Gentleman’s prepared remarks, but he does not seem to be living in the real world. We have delivered on offshore wind, which he mentioned. The price has fallen by two thirds—that is a Government success and we are going to pursue that sort of success to meet the net zero carbon target.