Ministers are looking at introducing salary sacrifice schemes for rooftop solar panels as part of efforts to cut energy bills, The i Paper can reveal.
The move would deliver tax benefits for those signing up and is seen as a way to sell net zero to ordinary households and help hit Sir Keir Starmer’s pledge to reduce bills by £300 a year.
The idea has received the backing of nearly 100 Labour MPs who have written to ministers urging them to press ahead with the plan.
Under salary sacrifice, an employee agrees to give up a portion of their salary in return for a non-cash benefit. Currently, the scheme is used for benefits such as pension contributions, cycle-to-work schemes and electric cars.
Because the payments come out of a worker’s gross salary, both the employer and the employee pay lower national insurance contributions, with the employee also reducing their income tax liability.
The scheme could feature in the Budget
The i Paper understands that Ed Miliband’s Department for Energy Security and Net Zero (DESNZ) is interested in the idea of extending salary sacrifice to rooftop solar panels, along with other clean energy technologies such as heat pumps and battery storage.
The policy may feature in the Government’s Warm Homes Plan, which is expected this month, The i Paper has been told.
However, the Treasury has to sign-off on the scheme, so it is possible an announcement could be delayed until November’s Budget or next year.
As well as delivering tax benefits for those signing up, salary sacrifice would help households absorb the large upfront costs of installing rooftop solar panels, which can be more than £6,000.
Once solar panels are installed, households can expect lower energy bills by generating their own electricity and exporting surplus energy back to the grid. Batteries – which can be installed in tandem with solar panels – increase savings by allowing households to store energy to use at the most expensive peak times.
The amount someone can save from rooftop solar depends on a range of factors including the size of the system, roof orientation, a household’s energy use and how sunny it is.
Families could ‘save £600 a year’
According to the Energy Saving Trust, families can save £600 a year or more from their bills, with a typical home having a break-even point of 10 years after installation.
The i Paper understands that the idea is being looked at as part of a wider pivot by Labour towards selling the financial benefits of net zero policies, rather than primarily rooting the argument in environmental concerns.
A huge uptake in rooftop solar panels is also seen by Labour figures as a highly visible way of showing voters how the Government is changing the country and improving families’ finances.
The idea enjoys broad support within the Labour Party, with 92 MPs signing a letter which was sent to DESNZ before the summer recess urging ministers to rollout salary sacrifice for solar panels, batteries and heat pumps.
Luke Murphy, the Labour MP for Basingstoke who coordinated the letter, told The i Paper: “It [salary sacrifice for rooftop solar] would be a really positive initiative. Salary sacrifice is a proven solution in terms of things like electric vehicles.
“Those employees with access to it are three to four times more likely to switch to an electric car versus those who don’t, and it could have a transformational impact if that was brought in for a wider set of technologies.”
A ‘positive impact’ on cost of living
Murphy said salary sacrifice would help “with the upfront capital cost and tied to other technologies like solar could also help dramatically lower people’s energy bills as well”.
“Combining the two, lowering that threshold for the capital cost upfront and reducing people’s day to day costs could be a pretty positive thing. We do need to be finding new ways to get people to take up the technologies and this is a proven way of doing that.”
Murphy, who is also on the organising committee of the Living Standards Coalition of Labour MPs, added: “I think overtime this could have a really positive impact on people’s cost of living by reducing their energy bills.”
A DESNZ spokesperson said: “This is speculation. Families have been paying the price for the fossil fuel rollercoaster for years and our Warm Homes Plan will make homes cheaper and cleaner to run, helping to cut their energy bills for good.
“Solar is central to our clean energy superpower mission, and we are helping households install solar panels and save around £500 a year on their energy bills as part of the government’s rooftop revolution.”
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