Autumn Budget and Spending Review 2021: The green economy reacts
BusinessGreen rounds up all the top reaction from green business figures, politicians, think tanks, NGOs and academics to Chancellor’s Budget
Just a week after the government finally unleashed its Net Zero Strategy, Heat and Buildings Strategy and the Treasury’s Net Zero Review, replete with a flurry of fresh policy and investment, it was now the turn of the Chancellor, Rishi Sunak, to set out the government’s spending plans for the next year and beyond.
Coming just days ahead of COP26 in Glasgow, where the UK is set to host crucial global climate talks aimed at averting a climate catastrophe, there was cautious optimism ahead of today’s Budget and Spending Review that Sunak could deliever ambitious fiscal support the UK’s burgeoning net zero transition.
However, his speech today was notable by its relative absence of net zero rhetoric, neglecting to make any mention of the word ‘climate’ at all, while only referring to ‘net zero’ twice, as he hailed the decarbonisation goal as an opportunity to back research, development and innovation.
There were notable fresh announcements regarding business rates relief for green technology investments, £1.7bn funding for a new nuclear power plant this Parliament, and fresh funding for skills, but these were counterbalanced by a hike in Air Passenger Duty and yet another freeze in fuel duty. Those hoping the government might use the Budget to fill the gaps of its £9.2bn manifesto pledge to ramp up the energy efficiency of UK homes were also sorely disappointed.
But while the Chancellor steered largely clear of the government’s green agenda, he declared the UK was soon to enter an “age of optimism” after the ravages of Covid-19, as he promised to invest in skills, innovation and infrastructure in the wake of the pandemic.
Here, BusinessGreen rounds up some of the reaction from across the green econmy:
Labour’s Shadow Chancellor Rachel Reeves said:
“[The Chancellor] is failing to tackle another huge issue of the day – adapting to climate change. Adapting to climate change presents opportunities – more Jobs, lower bills and cleaner air. But only if we act now and at scale. According to the OBR, failure to act will mean public sector debt explodes later, to nearly 300 per cent of GDP.
“The only way to be a prudent and responsible Chancellor is to be a Green Chancellor, to invest in the transition to a zero-carbon economy and give British businesses a head-start in the industries of the future. But with no mention of climate in his conference speech and the most passing of references today, we are burdened with a Chancellor unwilling to meet the challenges we face.
“Homeowners are left to face the costs of insulation on their own, industries like steel and hydrogen are in a global race without the support they need and the Chancellor is promoting domestic flights over high speed rail int he week before COP26. It is because of this Chancellor that in the very week we try and persuade other countries to reduce emissions, this government can’t even confirm it will meet its 2035 climate reduction target.”
Green Party MP Caroline Lucas said:
“With just five days to go before the start of COP26, it was astonishing that the Chancellor didn’t even mention the words climate or nature. The climate-shaped hole at the heart of this budget couldn’t be more glaring. One wonders if he’s even checked the calendar because when he goes to Glasgow to meet fellow finance ministers next week, he will be going empty-handed, with nothing to offer on the climate crisis.
“This wasn’t just a failure to address the climate emergency. With more money for roads, and with short haul flights cheaper, it actually took us backwards. It’s hard to think of a greater dereliction of our responsibility as COP hosts.”
Conservative Environment Network director Sam Hall said:
“There was much to welcome in today’s Budget from an environmental perspective, especially the confirmation of the significant funding commitments made in last week’s net zero strategy. New spending on levelling up, improving regional transport links, and scaling up R&D will also support the government’s net zero mission, while the firm commitment to restoring the 0.7 per cent target for overseas aid has given a boost to the imminent COP26 negotiations.
“But the Chancellor missed an opportunity to position nature recovery and net zero at the heart of the Treasury’s long-term economic strategy, to align the tax system with our environmental goals, and to plug some important funding gaps, such as incentives for owner occupiers to insulate their homes and funding for ambitious nature restoration beyond tree planting and peat restoration.”
Amal Larhlid, ESG tax leader at PwC, said:
“In today’s speech, the Chancellor has tried to strike the right balance between setting out a recovery plan for the UK and pushing forward the green agenda. Whilst we saw a freeze on fuel duty to aid household spending, as well as a reduction in Air Passenger Duty (APD) rates for domestic return flights, the Chancellor has focused on spending levers as a way of working towards achieving Net Zero commitments in the UK.
“The emphasis was centred around investment in ‘green industries of the future’ to the tune of £30bn which complements the commitments already published within the BEIS Net Zero Strategy. However, with no other major tax related announcements related to the climate agenda it is likely that we will see further announcements being made as part of COP26.
“The Chancellor continues to prepare the economy for the transition to net zero through the use of grants and funding by announcing £620m for public charging and an increasing capital support to £817m for the electrification of UK vehicles and their supply chains. However, the continued freeze on fuel duty highlights the conflicts and the short term challenges which need to be overcome to avoid damaging climate change.”
Greenpeace’s head of politics Rebecca Newsom said:
The climate emergency should have been the centrepiece ahead of the most critical UK-hosted climate talks in years, but Rishi Sunak spent more time discussing duty on domestic cider. The Chancellor appears to have delivered just five per cent of what’s needed to roll out green homes, clean transport, nature protection and support for workers to transition to green jobs, and is actively making things worse by making it cheaper to fly between UK cities.
“He’s missed the memo that an increase in green investment would not just lower carbon emissions and energy bills, but would also boost jobs and productivity, as well as the Government’s credibility at the climate talks. Each year proper funding for real climate action is delayed, the worse the climate crisis will get and the more costly it will become – both in monetary terms and for peoples’ lives.”
Green Alliance head of green renewal Sam Alvis said:
“The Chancellor’s approach to climate is increasingly difficult to understand. Just days away from a vital climate conference championed by the prime Minister, Rishi Sunak barely mentions net zero and encourages people to fly around the UK rather than take the train. The measure on air passenger duty will even cost the Treasury money rather than boost its revenue.
“On green investment, tax and even rhetoric, Rishi Sunak failed on his promise for a stronger economy. He has left an annual shortfall of £21bn in investment that could have driven local jobs and lower bills. There was little to help people make greener choices, whether through tax changes for home renovation or direct support for home insulation.
“The Chancellor is preaching fiscal responsibility when his own watchdog is urging him to decarbonise now to avoid economic pain later. Without more investment in climate, we’ll see jobs and skills and private sector innovation left by the wayside.”
IPPR Environmental Justice Commission head Luke Murphy said:
“Today the Chancellor declared the UK was entering an ‘age of optimism’ but instead he used the budget to extend the ages of fossil fuels. Cutting air passenger duty was the most significant new policy mentioned in the budget speech today which will have an impact on greenhouse gas emissions – and it will increase them. Rishi Sunak talked for longer about beer duty, than our duty to future generations to address the climate and nature crises.
“The truth is, this climate-void, fossil-fuel heavy budget failed to deliver the necessary £30nm of investment needed each year to meet our climate and nature targets. Investing in a green economy would have been the fiscally responsible thing to do, avoiding the huge costs of inaction, and maximising the benefits and opportunities of the transition. Our research shows that 1.7 million jobs could be created by 2035 in sectors from transport to home retrofit and low carbon electricity.”
“This budget was an own goal for a government that should be leading the world, ahead of the all-important global climate summit COP26, into a new low carbon age.”
RenewableUK CEO Dan McGrail said:
“It’s great to see the Chancellor backing the growth of our world-leading offshore wind industry in the run-up to COP26 with this funding which will help to increase UK manufacturing in this sector even further. It builds on the support Ministers have provided to upgrade UK ports to turn them into offshore wind manufacturing hubs and new centres of excellence as part of the Prime Minister’s Green Industrial Revolution.
“Already this year we’ve seen over £900m of private investment in new factories to manufacture offshore wind turbine blades, foundations, towers and cables in Teesside, the Humber, Newcastle and Blyth, delivering more than 2,500 new direct jobs in parts of the country which urgently need levelling up”.
UK Green Building Council CEO Julie Hirigoyen said:
“With the COP 26 conference just days away, the Chancellor’s announcements felt like they were from a different planet and a different time. Whilst we welcome changes to business rates to incentivize investment in renewable technologies, new research and development funding, and grants for local authorities, there were no big announcements to fill the clear gap that has emerged around decarbonising existing buildings.
With the Budget and Spending Review coming together, this was evidently the Chancellor’s big opportunity to plug the major gaps in the Government’s Net Zero and Heat and Buildings Strategies, and put the UK on a firm path to net zero over the next few years. By supporting the industry’s plan for a national programme to retrofit our homes, the Government could have delivered substantial progress towards net zero and unlocked a new wave of green jobs to help level up the country. Instead, attention to net zero was tokenistic, repeating old announcements alongside incongruous headlines around carbon-intensive investment in roads, cutting air passenger duty and fuel-duty freezes.
If the Chancellor is serious about building a strong, resilient economy, then turbocharging the green economy should be at the centre of all investment plans and skills initiatives, not merely be an afterthought. Every year that we fail to invest in tackling climate change increases the financial burden on future generations and Governments. With the UK’s green credentials in the spotlight next week, and public concern about climate change at an all-time high, these announcements could not be more disappointing.”
Green Alliance deputy policy director Roz Bulleid said:
“With no new funding announced for the UK steel industry, the government continues to put the long-term future of the sector at risk. Without investment now in new technology for clean steelmaking, the UK Government is falling behind in the global race to make steel with hydrogen, risking jobs and the sector’s future competitiveness.
Ahead of COP26, the Government must signal its commitment to a net zero future for the UK’s steel industry by committing to a net zero target for the sector and investing in a pilot of hydrogen-based steelmaking.”
E3G senior policy advisor for place-based transitions Juliet Philips said:
“A nationwide retrofit drive of our leaky homes is mission critical for net zero and the Government’s ambition to ‘level up’ opportunity and living standards across the UK. The Spending Review has failed to close the investment gap to get us on track for climate targets, and risks undermining progress towards healthier, energy efficient homes which are cheaper to run.
Moving forward, the Treasury can supercharge a green home retrofit drive through the new green gilt – which has committed the UK to an additional £16bn of green spending – and offering attractive deals to households and local authorities through the new UK Infrastructure Bank.”
IEMA’s CEO Sarah Mukherjee said:
“In today’s Budget the Chancellor has confirmed an increase of £3.8bn over the parliament in skills funding, which in part is targeted at developing the nation’s green jobs and skills. Investment in skills is critical if the government is to achieve its environmental aims, be that reaching net zero emissions by 2050, restoring biodiversity loss or maximising how we use natural capital.
“But investment alone is not enough. To create a truly green economy will require a more strategic approach to skills planning and provision. IEMA is urging the government to develop a National Green Skills and Jobs Strategy. As well as ensuring that there is a pipeline of talent coming through to propel growth in cleaner industries, the strategy should also focus on making all jobs ‘greener’ throughout the full range of economic sectors. As the leading professional body in the UK for environment and sustainability professionals we are well placed to help the government develop such a strategy.”
UK Sustainable Investment and Finance Association chief executive James Alexander said:
“We welcome the Chancellor’s confirmation that the UK intends to return to its commitment to spend 0.7 per cent of national income on overseas aid before the end of this parliament, which sends a positive signal to other countries ahead of COP26. We would urge the government to restore this vital target as soon as possible to rebuild international confidence in the UK’s leadership.
“However, this Budget needed to provide further detail on how the government’s public spending plans can deliver on the significant investment gaps identified in the ‘net-zero strategy’, which are needed to help drive the private investment required for the UK to reach its world-leading emissions targets. The longer the government delays the public investment needed to build a low-carbon economy, the harder this transition will be.
“To help meet these objectives, UKSIF continues to support the inclusion of a dedicated ‘net-zero’ chapter in every Budget statement, explaining in detail how the tax and spending decisions announced bring the UK closer towards this goal. This would lead to a far firmer demonstration that each Budget has net-zero at its core.”
Association for Renewable Energy and Clean Technology chief executive Dr Nina Skorupska said:
“The government’s heeding of our calls for a green business rate relief is certainly welcome and will support businesses in taking necessary steps to reduce their carbon footprint in a challenging economic climate. However, we can’t hide our disappointment that this Budget did not go much further by providing some of the fiscal measures needed to deliver the ambitions laid out in last week’s Net Zero Strategy, especially given that COP26 starts in just a few days’ time. Straightforward measures such as removing VAT on domestic renewables and clean technologies would have provided a catalyst for businesses and the economy, offered households long-term protections against volatile energy bills, and signalled a real statement of intent.
“In addition, while recognising the financial challenges faced by many motorists, any fuel duty freeze should have been accompanied by extra support to make electric vehicles more affordable and accessible. Similarly, although it was accompanied by investment last week in the ‘Jet Zero’ transition, a fuel duty cut for domestic aviation duty undermines the Government’s green credentials ahead of COP26.
“In short, while we welcome the progress that has been made, this Budget was a missed opportunity. We are in little doubt – unless decisive and substantial action is taken soon, the government runs the risk of failing to meet its Net Zero targets.”
Royal Society president Sir Adrian Smith said:
“We welcome the Chancellor’s commitment in the Spending Review to increase funding to £20 billion a year by the end of this Parliament, with a clear plan to reach £22bn by 2026/7, and specific plans to strengthen the science and innovation ecosystem. Recognising the unprecedented circumstances faced by the country, today’s announcement of sustained increases for science funding is a welcome recognition of the importance of science and innovation to the nation’s resilience and growth. It is also a strong signal of the government’s ambition to grow the full potential of the UK as a global leader in science and innovation.
“Over the past few weeks this argument has been repeatedly made by the science and business communities and we are pleased that the government has listened. This long-term commitment to research sends a positive message to businesses, at home and abroad, that the UK is and will remain a global science leader.”
Tom Greatrex, chief executive of the Nuclear Industry Association, said:
“This is a big vote of confidence in nuclear and a historic step forward for nuclear investment, with new money for a large-scale project, alongside money for modular reactors to enable future projects. We can’t get to net zero without investing in new nuclear capacity, and this is a clear signal from government to investors that it sees nuclear as essential to our clean energy transition. This is not only an investment in a greener future, but also in jobs and skills right across the country.”
