Chris Huhne and Dennis Moore

Dennis Moore - the unforgettable and inept highwayman in Monty Python.

He starts out as a champion of the poor, but only steals Lupins. Finally he is convinced by the starving peasants to steal items of value.

But he ends up robbing the poor to give to the rich.

Dennis Moore has a rousing anthem, sung to the tune of Robin Hood. The final verse of Dennis Moore's anthem says it all:

Dennis Moore, Dennis Moore
Without a merry band
He steals from the poor
And gives to the rich
Stupid bitch

So has Chris Huhne become the real life incarnation of Dennis Moore? Has he become the Lupin Czar of the Coalition?

Maybe not. But he is eagerly pursuing hair brained policies that give tax breaks to the rich while making the poor pay for them.

Lets just leave the lunacy of the ROC subsidies for wind power to one side for the moment and look at the other great plank of renewable subsidy. The FIT subsidy for Solar PV. FIT stands for Feed In Tariff.

Basically a householder would spend about £12-25000 on having an "approved" solar PV system fitted. This of course is done by an "approved" installer.

The FIT subsidy then pays the house-holder about 41p for every unit of electricity they generate (even if they use it themselves).

The electricity generated also offsets previously bought in electricity. This saves about 13p per unit, knocked off the electricity bill.

Finally, if they manage to export electricity to the grid (unlikely) they will be paid roughly what it cost to generate by any normal means - 3p.

The tax free return on the initial investment is said to approach 10%. ( See Here ).

Not bad. especially if you are a higher rate tax payer.

The scheme is paid for by a levy on all domestic electricity bills. Rich and poor all pay the same.

So, who has £10-25K just floating around gathering dust?

I don't mean who has saved £25K for a rainy day, their kids education, weddings or retirement or whatever. I mean who has £25K, surplus to requirements. Money that can be locked up long term in a Solar PV investment.

The answer is of course - the well off.

So, for the well off, fitting solar PV is an extremely tax efficient way of using a spare £25K that is probably just rotting in a bank account.

I have nothing against people being canny with their money. Taking advantage of this ludicrous scheme is a no-brainer. After all, it is government approved! Looking after your own tax efficiency and wealth is a good thing.

Taking advantage of gross governmental stupidity is more akin to sport than anything else.

But you can guarantee that those on low incomes, won't be queuing up for their FIT approved Solar PV panels any-time soon.  Most don't have 25p going spare, let alone £25K.

But thanks to Chris Huhne's levy, it will be the poor who will be paying. Along with those who cannot justify the long payback time-scale or initial outlay.

There is perhaps a case for some encouragement for getting people to fit solar PV, but punishing the less well off to give what is essentially a tax break to the rich is hardly equitable.

Along with that, the current scheme with "approved" installers and "certified" panels etc. is just a dodgy salesmen's dream come true.

You can guarantee that there is a huge mark-up on this "approved" kit and on the hourly rates being charged by these newly badged up installers.

But it is still worthwhile getting FIT approved solar PV installed. If that is, you have the money to spare.

So Billothewisp's Top Tip:

If you have the money and are not going to need it in the short to medium term, and especially if you are a higher rate tax payer, get some FIT approved Solar PV installed.

If however you are poor or simply cannot afford solar PV then, well, you need to get used to paying the subsidy for other peoples tax breaks.

For that you can thank the aspiring Dennis Moore of the modern age:.

Our own Chris Huhne.


Anonymous said...

companies are willing to fit Solar PV for free, they get the resultant revenue and you get reduced electric bills.
You don't need to be rich or have £25k going spare to benefit from this.

Well done Billo, another factually inept blog.

BilloTheWisp said...

Oh the gullibility of some.

Why do you think they want to fit the things for free? They are making a fortune out of it. They can not only collect the huge FIT they also get to write off the cost of the panels against tax over about 4 years. Then its pure profit.

And who pays? The poor suckers on "prepay" meters living in council flats, or locked in on economy 7 tariffs.

The FIT is financed purely by a tariff on every electricity bill in the land - everyone pays, few benefit.

It is particularly an ugly racket with these "free fit" companies who are in essence exploiting the poor for their own financial gain.

Why be anonymous? I am sure you have important arguments to put forward, anonymity doesn't help.

Anonymous said...

Of course it makes money for the companies, (although I wouldn't say it's a fortune) that's how our flawed economy works.
If you have money, you invest it and expect a return, otherwise you would just be giving it away (very laudable but unlikely to be a successful business strategy).
The Feed in Tariffs are a weak governments way of using market forces to drive development, not a method I would choose but it does mean that those who use most, pay most - excepting that the 1st KWh costs more than the last, it should be the other way around.

As far as anonymity, it's not abundantly clear who you are either Billo! I guess I could use a pseudonym if it makes you happy?

BilloTheWisp said...

"Not a fortune" Well...The companies involved have correctly reasoned that with "free" installations (I bet the contracts make interesting reading) they can then claim the 41p per KW/hr for the next 25 years. Try this link it makes interesting reading. Looks like you save £150 year while they get £600. Guaranteed by the govt for 25 years. Paid for by the poor. They are raking it in. I don't mind companies or people making good profits. But this is all bogus. It is all based on a govt larging it about with the consumers money.

I disagree with you that those who use most pay the most. This is actually going to be one of my next posts. In fact the more you use the less per unit you pay which is exactly the wrong way round. Consider this: If instead of spending money on FITs the government abolished VAT on condensing gas boilers, each new boiler would save about 30% gas per year for each house - that's somewhere between £100 -£200 per year plus much less emissions. No subsidies. No wide boys getting rich. Just unfashionable. (not very popular with BG either)
I am not against solar PV and not even subsidies for that matter but they have to be reasonable and realistic.

As to anonymous. OK. Point taken. But it would be nice to distinguish between various anonymous's, so maybe a pseudonym on your comments would not go amiss.

Lulworth Lad said...

Me thinks you were a little too hasty in your reply to my earlier post,
"those who use most, pay most - excepting that the 1st KWh costs more than the last, it should be the other way around."
It stands to reason that if you use large amounts of electric, you pay higher bills and your contribution to such schemes are correspondingly greater.
And I am also pointing out that the 1st unit you use is more expensive than the last, which as we both say, is the wrong way around. So you are actually agreeing with me on that.

Now if you had £25,000 to invest in a business, you would be looking for a return in the region of 6-10%, otherwise you would put your money into a nice, safe, high interest account.
If you look at the figures for Feed in Tariff returns, they are pitched in this region, above interest rates, specifically to attract investment and to make it viable for people to borrow the money if they want to.

Just how sound is a government guarantee is anyone's guess!

BilloTheWisp said...

A local boy then.

A slight cross purposes there. Yes I entirely agree with you that the current concept of rebates for high use is the wrong way round. More on that in another post.

But I'm sorry, the "free" PV'ers don't invest £25K for the £600 per yr. £25K is what they charge to install for a third party. They are risking cost price equipment plus labour rates only. Then it is as good as being in the bank - probably safer!. If they put it in a bank they would be doing very well to get 2%.

A guaranteed 25 year subsidy of 315% actual retail price (41p vs 13p) is so absurdly generous it is hardly likely to encourage innovation. The high users are also likely to be the well off. Nothing wrong with that. But they are also likely to get FIT approved PV installed. Then they become low users, paid for by the poor on pre-payment meters and (laughably called) Economy 7. (more on that soon too!).

Anyway, it's good to have your thought provoking comments. Feel free to post again but I can't reply again tonight.I've got to do another post now!

JAA said...

BUT (a big but) assuming the gov. keeps paying out for the whole term of the deal. I for one don't trust them to do so.

I direct my learned friends to the example of Spain.

(Also my due south facing roof with at least 10m^2 free was rejected for such a scheme. No idea why.)