Energy consultancy’s analysis shows huge tax loss to the Treasury if jobs are lost because of cuts to government subsidies for solar power

The Treasury could lose £230m a year in tax income if the government presses ahead with plans to cut the feed in tariff for solar power, fresh analysis has found.

Last month the government proposed to cut the tariff that householders are paid for their surplus solar electricity from 43p per kWh to 21p per kWh, which many in the industry said would lead to a loss of thousands of jobs.

The analysis, conducted by Element Energy for Friends of the Earth and the Solar Trade Association’s Cut Don’t Kill campaign, estimated the Treasury currently makes £275m from the solar power industry through employment taxes and VAT.

The Treasury’s own figures estimate the changes to the tariff will cost between 18,000 and 29,000 jobs, which Element Energy said would lead to between £105m and £230m in lost tax take.

Howard Johns, chair of the Solar Trade Association, said: “It is madness at a time when David Cameron’s priorities are deficit reduction and delivering growth to enact a proposal that will make the deficit and the economic situation worse. This study shows that the tariff cut is utterly counterproductive for the government – added to which tens of thousands of workers are facing redundancy before Christmas.”

Friends of the Earth and a number of solar industry firms are taking legal action against the government to stop the cut going through on 12 December.

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