Thousands of jobs and millions in taxes threatened by cut in solar power subsidies

Up to 29,000 jobs and £230m a year in taxes will be under threat today, as the Government controversially slashes solar power subsidies, environment group Friends of the Earth (FOE) says.

After a last-minute rush to register for the original subsidy rate, households and small businesses signing up to the so-called feed-in-tariff (FIT) scheme from today will see earnings from energy they produce cut in half.

The FITs have generated more than £275m annually in tax and created thousands of jobs since the scheme began in April 2010, says energy consultants Element Energy.

However, between 18,000 and 29,000 of the solar industry's estimated 30,000 jobs are now at risk, threatening most of the tax revenue they generate, according to Element's research, which was commissioned by FOE and the "Cut Don't Kill" campaign.

Opposition from the photovoltaic industry has been mounting since the Government announced in October that it would cut the subsidy paid to micro-generating solar power from 43p per kwh to 21p. The rush to qualify ahead of the subsidy reduction led to technical problems on the Government's Microgeneration Certificate Scheme website, where installations have to be registered.

Element's research suggests that solar tariffs have actually been profitable so far. Its estimate for the tax generated by the industry is higher than the £110m the Government estimates will have been spent on subsidies in the two years to April 2012.

Although the cost of the FIT scheme is eventually expected to outweigh the tax revenues it generates, income from sales and employment is likely to account for more than half of the cost – and that's before considering corporation tax, knock-on business and the impact of workers spending their wages, according to FOE energy campaigner Donna Hume.

The introduction of lower tariffs comes ahead of a High Court hearing on Thursday into their legality.

FOE and two solar companies say the tariffs are illegal as the consultation period on the move does not end until December 23, some 11 days after their introduction. The judge is expected to decide whether to dismiss the case or to convene a full hearing.

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