Plans for dramatic cuts in government subsidies for onshore windfarms are being drawn up by the Treasury in a move that seriously undermines David Cameron’s claim to be running “the greenest government ever”.
The Observer has learned that George Osborne is demanding cuts of 25% in subsidies, a reduction the industry says would “kill dead” the development of wind power sites. The Treasury’s stance has put the chancellor at loggerheads with the Liberal Democrat energy secretary Ed Davey, whose party strongly supports more renewable energy.
Osborne, whose reputation has taken a dive following his widely criticised budget and a subsequent string of U-turns, has been under heavy pressure from Tory MPs to reduce the billions spent on green commitments.
In February more than 100 Conservative backbenchers wrote to the prime minister demanding cuts to the £400m a year public subsidies for windfarms which they see as evidence of too much Lib Dem influence over coalition policy. A prominent opponent of onshore wind power is the Duke of Edinburgh, who is said to have described turbines as useless and to believe they will never work.
Tim Yeo, Tory chairman of the all-party energy and climate change select committee, said the Treasury and the Department of Energy and Climate Change (Decc), which is headed by Davey, were following different agendas. “This is an example of where Decc’s attempts to stimulate renewable energy are being hampered by Treasury intervention,” he said. “The way to deal with this – and realise the savings the Treasury wants to achieve – is to have more onshore renewable energy, which requires lower levels of subsidy, and less offshore, which requires more. We need to change the balance.”
Critics accuse the chancellor of pandering to Conservative backbenchers who do not want turbines built in their constituencies, believing they will damage their prospects of re-election. They argue the cuts make no economic sense, because alternatives, such as siting the turbines in the sea, would be much more expensive. “This is a reckless act of political opportunism by a chancellor keen to boost his popularity among his backbench MPs,” said Juliet Davenport, chief executive of renewable electricity supplier Good Energy.
However, Chris Heaton-Harris, a Tory MP who led the backbench campaign for cuts, said he was greatly encouraged. “I want to see a dramatic cut,” he said, arguing that onshore wind power was expensive compared with gas and that it would drive up fuel poverty.