The ‘Cut Don’t Kill’ campaign, a coalition of British solar power companies and NGOs including Friends of the Earth has responded to the UK government’s proposals to cut the feed-in tariff on domestic solar electricity production by 52pc by saying that such a reduction would kill the industry, destroying 4,000 companies and 25,000 jobs.

On Monday, Climate Change and Energy Minister Greg Barker revealed plans to cut subsidies as part of “an urgent effort to keep the FITs (feed-in tariff) scheme budget under control and reflect the plummeting costs of the technology”.

Barker is proposing to introduce a new tariff for schemes up to 4kW of 21p per kilowatt hour, down from the current 43.3p rate. Reduced rates are also proposed for schemes between 4kW and 250kW.

“My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn’t fall victim to boom and bust,” said Barker.

“The plummeting costs of solar mean we’ve got no option but to act so that we stay within budget and not threaten the whole viability of the FITs scheme.

“Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.”

According to the Department of Climate Change and Energy, the cost of an average domestic PV installation has fallen by at least 30pc since the start of the scheme – from around £13,000 in April 2010 to £9,000 now.

The Department said that if no action was taken, FITs for solar PV would be costing consumers £980m a year by 2014-15, adding around £26 (2010 prices) to annual domestic electricity bills in 2020. “Our proposals will restrict FITs PV costs to between £250-280m in 2014-15, reducing the impacts of FITs expenditure on PV on domestic electricity bills by around £23 (2010 prices) in 2020.

“There is a finite funding allocation for the FITs scheme so as to limit the impact on energy consumers, who pay for the scheme through their bills,” it said.

The new proposed tariffs would apply to all new solar PV installations with an eligibility date on or after 12 December 2011. Such installations would receive the current tariff before moving to the lower tariffs on 1 April 2012. Consumers who already receive FITs will see their existing payments unchanged, and those with an eligibility date on or before 12 December will receive the current rates for 25 years.

“Such deep cuts to the tariff would kill the UK solar industry stone dead,” said Howard Johns, chairman of the Solar Trade Association, speaking on behalf of the Cut Don’t Kill campaign. “We are happy to accept some cuts, but the Government must recognise that wiping out 4,000 companies and 25,000 jobs by cutting too deeply would be an appalling waste of economic potential. Our message to the Government is cut us, but don’t kill us – we want a sustainable cut that would allow us to survive and deliver the green growth that David Cameron said he was committed to.”

“The Government has a choice – either they can cut like this and make an entire industry go bust, or they can work with us to properly plan the phasing out of the tariff bit by bit, which will produce a flourishing industry that won’t need any subsidy or support.”

The Cut Don’t Kill campaign is organising a day of action in Westminster, scheduled for 23 November, when the industry will rally to persuade MPs and Ministers to reduce the planned cuts to the feed-in tariff.