Government faced intense lobbying over plans to reduce subsidy on wind farms and in the face of that agreed to a 10% cut, rather than a higher figure, say Whitehall sources
Foreign energy companies threatened to withdraw jobs and investment from Britain unless ministers kept wind farm subsidies high.
The government faced strong behind-the-scenes lobbying before last week’s announcement that subsidies would be cut by 10% rather than the 25% demanded by more than 100 Conservative MPs.
A senior Whitehall source told The Sunday Telegraph: “Investors went absolutely mental. Very senior people in inward investors into Britain made it clear what this would mean for jobs and spending in this country.
“They were not sabre-rattling – they were serious. We realised we had to come to a decision.”;
Ed Davey, the Liberal Democrat energy secretary, made the surprise announcement last week, which was seen as a big political victory for his party.
Foreign firms, which make hundreds of millions of pounds a year in subsidies for on-shore wind farms, were said to be concerned that a dispute within the coalition government could drag on into the autumn and create uncertainty within the industry.
They piled pressure on to ministers to retain large subsidies, although David Cameron, the prime minister, and George Osborne, the chancellor, had both wanted bigger cuts, The Sunday Telegraph reported.
Foreign investors in British wind farms include EDF, the French energy company, along with others in Japan, the United States, Norway, Sweden, France, Spain, the Netherlands and Germany.
Nick De Bois, Conservative MP for Enfield North, told The Sunday Telegraph: “I do not believe the case for onshore wind has been made.
“It is for the government to decide on policy and the detail of subsidies, not the energy companies. If this is the position of the industry, it is very disappointing.”
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