New UK Chancellor of the Exchequer Philip Hammond’s first pre-Budget financial statement today (23 November 2016) left most environmental bodies less than impressed.

The Autumn Statement (which is to move to Spring from 2018) chose to prioritise investment in infrastructure and innovation aimed at raising Britain’s productivity, including a £23 billion Productivity Investment Fund.

Positive moves to emerge for the environment included the news that £150 million was to be invested in at least 500 new electric and hydrogen buses, reducing the emissions of 1,500 existing buses and supporting taxis to become zero emission, helping to improve air pollution in urban areas.

Further investment to the tune of £80 million was also pledged to install more charging points for ultra-low emission vehicles. This was coupled with a two-year 100% first year allowance for companies who install electric charge-points with immediate effect.

And reflecting pressures on the oil and gas industry, fuel duty remains frozen for the seventh successive year, and the Carbon Price tax relief for oil and gas companies remains the same.
Another post- Brexit concern was assuaged with a major increase in research and development funding for universities and businesses to back scientific research and development of technologies such as robotics, artificial intelligence and industrial biotechnology.

Productivity and energy saving

The Association for Decentralised Energy (ADE) and the Association for the Conservation of Energy (ACE) welcomed the Productivity Investment Fund saying it could provide help for businesses to make additional energy productivity investments and improvements.

ADE Director Dr Tim Rotheray said: “Improving energy productivity should be an integral part of both the Productivity Investment Fund and the new money for the Local Growth Fund. As our 2016 Energy Productivity Audit showed, the UK economy produced £193bn more in goods and services over the past five years using the same amount of energy, supported by energy efficiency investments by the industrial, services and domestic sectors. By making energy part of their productivity ambitions, the Chancellor will only drive further economic success.”

The Solar Trade Association (STA) was disappointed that Mr Hammond made no mention of climate change, the Paris Agreement, or renewable energy, but welcomed the additional funding for infrastructure and electric vehicles. STA CEO, Paul Barwell, commented: “It is also good news that there is no cut to the Carbon Price support, and we look forward to working with the Government over their emissions reduction plan and the future of the Levy Control Framework. However proposed business rate rises risk undermining an industry that is already adjusting to a low-support framework, and will make many systems uneconomical.”

The STA had hoped the proposed business rates increase for commercial solar installations would be removed.

Jam tomorrow

Dustin Benton, deputy director of sustainability body the Green Alliance, said this was a ‘jam tomorrow’ Autumn Statement: “The Chancellor announced £23bn in investment today for the economy of the future,” he said. “That future is low carbon, so we should make sure our infrastructure is too.”

“Renewable energy infrastructure, which could deliver an additional £22 billion in private sector investment before 2020, has been put on hold until the March budget,” he continued. “Energy efficiency infrastructure didn’t get a mention, despite the headline that fossil fuel prices are now driving UK inflation. The best news is that the Chancellor has backed electric vehicles, by announcing £390m for EVs and tax credits for charging infrastructure.”

Business confidence

A spokesperson from investment bank Barclays Capital commented: “In contrast to most expectations – and previous Government guidance – the 2016 UK Autumn Statement contained no material change of policy with respect to the energy utilities. The Carbon Price Support level remains frozen until March 2020, then indexed to inflation until March 2021 – both inline with current policy. The Government stated that they “will continue to consider the appropriate mechanism for determining the carbon price in the 2020s”. In respect of Retail Energy Policy, the Government “will look carefully over the coming months at the functioning of key markets, including the retail energy market, to make sure they are functioning fairly for all consumers”, and the future of the Levy Control Framework renewables subsidy will be set out in the 2017 Budget.”

The assessment of Martin Baxter, Chief Policy Advisor at the Institute of Environmental Management and Assessment (IEMA) was "Could do better!" Baxter said: “Today’s Autumn Statement has provided some level of confidence for business in terms of investment at a time of uncertainty, which is a welcome move. Investment in infrastructure, industry and skills is a strong trinity of themes that together, will bolster the UK’s resilience, competitively and productivity. Given this direction, we are looking to the government to ensure that environment and sustainability skills are absolutely central to this programme. We are disappointed that this hasn’t thus far appeared to be prominent. We look forward to seeing this come through in the imminent industrial strategy, the emissions reduction plan and the 25-year environment plan.
“Having said that,” Baxter continued, “this statement has done little else to demonstrate Government’s commitment to environment and sustainability issues.”

What about smart meters? says GMB

Energy trade union the GMB called the Autumn Statement ‘ridiculous‘, pointing out that it has a gaping black hole as regards the £14 billion smart meter roll-out. “Who will pay for UK’s biggest ever infrastructure project?” the union asks.

Justin Bowden, GMB National Secretary, said: “It is ridiculous that the Autumn Statement did not even mention the biggest infrastructure the UK has ever had.”

The project will see new smart meters installed in 30 million homes and businesses at an estimated cost of £215 each, with a target date of 2020. The cost is nearly 30 per cent of the £55.7 billion needed for the High Speed 2 rail project.

Bowden continued: “Trying to install 53 million smart meters by 2020 is cloud cuckoo land - unless there is a massive Government-led programme starting now to ensure adequate staff to do the work, alongside proper funding. Every electricity and gas customer in the country will want to know whether by leaving smart metering out of the autumn statement, the Chancellor has a cunning plan to try and sneak the costs onto them.”