Ministers have delayed plans to axe Government subsidies for wind farms after another disagreement between the Conservatives and the Liberal Democrats. The Government was poised to announce a 25 per cent cut in wind farm subsidies today after warnings from George Osborne that the taxpayer support was too generous.
The planned deal, phased in over several years, also involved a system of community grants to encourage wind farm development in some areas as part of a “complex package”. Sources claim that Ed Davey, the Climate Change Secretary, agreed in principle with the cuts — far greater than the 10 per cent reduction initially proposed by a Government review.
Campaigners had warned that the cuts would “sound the death knell” for British wind farms. Onshore wind farms will this year receive about £1 billion in Government subsidies.
An announcement was due to be made today but Nick Clegg is thought to have removed Liberal Democrat support for the scheme yesterday. Another compromise deal
is being negotiated, which will be announced in the autumn, along with a new gas strategy to replace some wind generation.
A Conservative source said: “We are prepared to play this long. Energy policy is absolutely critical and the Chancellor was not happy with what was ultimately on the table.”
David Cameron and Nick Clegg yesterday staged a public show of support for the Coalition, which has been shaken by a Tory rebellion over Lords reform.
However, behind the scenes, there was disagreement over the energy policy.
Wind farms have sparked threats of another major rebellion by backbench Tory MPs. Earlier this year, more than 100 MPs wrote a letter demanding cuts to the subsidies for the “inefficient and intermittent energy” supplied by wind farms.
The Conservatives argue that wind turbines are a blight on the countryside and were built only because the energy market was unfairly rigged in their favour by subsidies. Mr Osborne is understood to have supported the backbench demands. The Chancellor was confident yesterday of securing a deal to cut the subsidies sharply over several years.
However, many Liberal Democrats believe wind power is vital for environmental reasons.
Chris Huhne, the former Climate Change Secretary, had blocked any subsidy cuts.
However, Mr Davey, his replacement, is thought to have taken a more pragmatic approach.
He is understood to favour free-market solutions to the looming energy crisis and backs the removal of subsidies over the next decade.