Posted by: Nick Duxbury13/01/2012
Friday 13: a diary date that is usually associated with colossal misfortune.
As the legal teams representing the government and the solar consortium fronted by Friends of the Earth filed into court 69 (a number loaded with very different connotations of its own) of the High Court at 9.30 this morning, the question running through their minds must have been: unlucky for whom?
Despite what many thought, today was not quite the judgement day for the government we expected over its decision to slash the feed-in-tariff in half from 43.3p/kWh to 21p/kWh from 12 December – four months earlier than planned.
Before Christmas the High Court found that that this was an unlawful move because the cut came into effect before the accompanying consultation closed on 23 December. Last Wednesday, the government lodged its inevitable appeal on the grounds that Justice Mitting was plain wrong.
This morning, after months of uncertainty, sniping and waiting, the court was to decide whether to allow the government to appeal and also wrap it up into an appeal hearing. Confused? Well, it doesn’t get any clearer from here on in.
First of all, if you were expecting a firm conclusion from today, then I am sorry to disappoint.
Yes, today will be remembered as the day when one party emerges a loser, but the chances are the actual judgement is unlikely to return next week. As I predicted this morning, today will not be drawing a line under all that uncertainty.
But that is not to say it was not an interesting hearing. Upon arrival it had all the makings of a classic clash. On the left hand side of the court was the wigged team representing the big bad penny-pinching government. On the right was the wigged team of learned colleagues for the plucky green underdogs.
The pantomime set up was hard to ignore given they were surrounded by a bizarre collection of personalities from across the green sector, from solar companies (often wearing fleeces with corporate logos on, but one boss proudly wearing tails and a Hull scarf), and, of course, journalists like myself camped out on the floor. A lack of government cheerleaders wasn’t going to affect the judges though.
Justices Moses, Lloyd and Richards faced us – all three grey haired and wise – sitting on their red thrones, owl-like in their unblinking, stern focus on the techy legal details of a subject that could bore the biggest green enthusiast at the best of times. When they threw in the occasional suggestion of joke there was a disproportionate response of hilarity from the room, as everyone pretended that, in true English style, for a few minutes we weren’t witnessing an incredibly awkward culmination of months of bitterness and resentment.
The government kicked off. Its argument was long, complicated and took a long time to get to the point, but when it did, it appeared to capture the sympathy (or at least the understanding) of Justice Moses. The gist of it was as follows:
- The costs of PV have dropped substantially in a short space of time (more than expected), and the step down in the tariff rate, though significant, broadly matches this.
- The issue of fairness is not relevant to the argument over legality – but were it to be considered, the six week period provided was in fact a fair amount of notice for those schemes that had ‘crossed the starting line’. This is evidenced by the fact that 102,000 installations went ahead in that period compared with 126,000 over 18 months.
- The case should rest of the issue of purpose: the secretary of state was entitled to make the proposals (and they are just proposals being consulted on rather than a firm decision) – and given the circumstances, he was clearly acting in an administrative capacity for the best interests of the scheme, the government and bill payers.
- The secretary of state does have the power to make these modifications. Justice Mitting misunderstood the ambit of a frequently referenced Section 41 of FITs scheme documentation which enables him to act and modify.
- There was ‘a false notion of vested rights’ for generators of solar electricity. The right to payment is only subject to the lawful decisions the secretary of state may make. For those that had not made the decision to push ahead with PV, they have no rights in this respect. The principle of fairness wouldn’t limit Section 41.
- The point about retrospective changes is a ‘red herring’.
These arguments were met with a series of shaking of heads and furtive murmuring from the solar legal team. Meanwhile Justice Moses mused on the government’s problem of having to do it like you would if you were building a railway with a full consultation, ‘or you act like you might with a budget – before the days of leaks’.
After a refreshment/tweet break (@nickduxbury if you’re asking), it was back in for the second half. The solar legal team came out fighting. Extensive evidence was heard that looked to undermine the picture of reasonable actions taken under extreme circumstances painted in the morning.
A witness statement from the chair of the Local Government Association was read out telling of the inadequacy of the six week window leading up to the 12 December cut. Stories I have written time and time over were told to the three owls about the thousands of local authority and housing association installations that were abandoned as a result of the cut.
Then the impact on the many thousands of social tenants (I have previously reported this to be a conservative 38,000) who had expected to see their eye watering fuel bills cut back as a result of PV schemes was explained. Schemes such as Wrexham’s 3,000 panel plans that were left by the wayside were listed.
Next, the impact on investor confidence was emphasised. The CBI’s claim that the FIT cut has ‘evaporated’ confidence was reiterated – and, significantly it was claimed that banks are devaluing existing PV schemes because they do not trust the government. No evidence for this was given – and clearly I will try and find it – but the suggestion is deeply concerning; that banks do not believe the government will treat the FIT like a bond-like income stream it is supposed to be, and expect the government to intervene and change the FIT again in the future. This bodes very badly for the green deal and renewable heat incentive if it is true.
The argument went: ‘It shows an expectation that the government can use statutory powers to change existing payments – how that can tie into encouraging investor confidence is irreconcilable.’
It was then argued that:
- The afore-mentioned section 41 and 42 does not allow the secretary of state to amend the FIT rate. The language used is general. And, although I was not present when the argument was made that generators of renewable electricity did have vested rights, the powers were not sufficient to overturn said unproven rights.
- Anyone who installed PV after the 12 December and before 1 April has converted their potential entitlement into an actual entitlement because the law has not yet been changed (the consultation conclusions have not been published).
- The point was made that all the companies that have bought PV and built up supply chains as well as spending cash on legal fees etc have effectively suffered a confiscation of assets (this confused me, but a series of old cases were referenced that made this point and referred to the legalities of acting retrospectively).
- The FIT is supposed to be a fixed payment – ‘not the payment the secretary of state chooses to make from time to time’. A comparison was then made to government bonds: ‘It’s like the government is issuing a 25 year fixed gilt bond and changing the bond rate after a year’.
Then, on the news it would take a further hour and a half to complete the evidence process, lunch was called and I dashed back to the office to report the above to you. Apologies for not being there for the full evidence, but my escape was justified on the basis that the government’s grounds for appeal are more important than the solar lobby’s grounds against - given we have already heard them and most people are familiar with the arguments around fairness.
Also, FOE warned this could go to the Supreme Court if the government loses so it could rumble on and on and on.
So who feels luckier on this day of fabled misfortune? One solar boss watching the case told me he was pretty confident of another victory. ‘They are just waffling aren’t they?’
Maybe. But by reframing the argument completely to three separate and especially sober judges, the government’s appeal is likely to, at the very least, get careful consideration.
As for the solar lobby – well, they have waited this long, what’s one more weekend of uncertainty and irritation?
From Green paper
Examining the latest developments from the world of sustainable housing.