More firms join legal action against government over illegal cut to solar feed-in-tariff

Solar panels

The legal action against the government from solar firms claiming lost earnings caused by illegal changes to the solar electricity feed-in tariff has swelled to £50m after more firms joined the action.

Prospect Law said it has issued a Letter Before Claim to the Department of Energy and Climate Change on behalf of a further five solar installation and construction companies, bringing to eight the number of firms taking action against the government.

The request brings the total demand for compensation of losses incurred by the unlawful cuts to the solar feed-in-tariff (FIT) to approximately £50m, up from the initial demand of £2.2m made in July.

As Building revealed in September the legal action could yet swell to more than £100m as more companies come on board.

Prospect Law said more firms were expected to file proceedings within the coming weeks.

The firms claim they lost millions of pounds worth of business after the government announced in October 2011 that it would slash by half the FIT for solar power, which is paid to people who install solar panels on their property for the power generated.

The announcement prompted a slump in the industry, with installations falling 97%.

The move was subsequently ruled illegal by the High Court because the 12 December cut-off date stipulated by the government was before the consultation on the change had ended.

The five companies now calling for damages join Solar Power PV Ltd; Crystal Windows and Doors Ltd; and Solarlec PV Solutions Ltd, which lodged claims at the High Court at the end of August following DECC’s earlier refusal to accept liability for their losses.

Prospect Law said it would now issue a claim on behalf of all the new claimant firms and then join these to the original claim.

Only one of the five new claimants – E-tricity - wished to be identified, a spokesman for Prospect law said.

Simon Gillett, chief executive of E-tricity, said the cut to the FIT rate “had put a great deal of pressure on both the business and its employees, forcing us to make drastic cut-backs and cost reductions wherever possible”.

“We are one of the lucky few that have been able to keep our business moving, but the reality is that the way in which DECC attempted to introduce these cuts to FITS rates caused our business and the industry significant damage and loss,” he added.

Caroline Flint, Labour’s shadow energy secretary,  said: “For months Labour warned that the Government’s cuts to the feed-in tariff for solar power went too far and too fast.

“Thousands of people have lost their jobs, many businesses in the solar industry have seen their order books dry up and the number of people installing solar panels has collapsed.

“Ministers must come clean about why they pushed ahead with their unlawful plans and what legal advice they got in the first place.

“It would be unforgivable if hard-pressed taxpayers are now left to foot the bill for this Government’s incompetence.”

A DECC spokesman said: “While we can’t comment on the details of individual cases, the Department does not accept it has any liability and we will vigorously defend our position.”