The UK Shareholders Association has pushed back forcefully against government proposals to change the inflation measure used to calculate indexation in the renewables obligation scheme. These proposals have led to investment losses for individual investors, deterred equity investment and increased the cost of capital for governments. The clumsy consultation launch led to the creation of a false market in the shares of renewables companies.
The government has issued proposals to change the indexation measure used in the Renewables Obligation scheme. Not only do the proposals suggest changing the measure from RPI to the lower CPI measure, one of the options would backdate the implementation many years to the start of the scheme. This retrospective approach would undermine investor confidence and increase the cost of capital for government. Individual investors will be deterred from investing, which undermines the government’s intention to encourage greater individual investor involvement in the stock market. The clumsy consultation launch also led to the creation of a false market in the shares of renewables companies. Individual investors have been hit hard, with the value of their investments falling by as much as 10%. UK Shareholders calls on the government to withdraw these proposals, recognise and learn from its mistakes, and take care not to repeat them in future.
