Autumn Statement: Key points and industry reaction

George Osborne delivered his mini-Budget today as sustainability professionals called for rapid decarbonisation, a move towards a fully circular economy and a better long-term strategy for sustainability.

Published 3rd December 2014

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What Osborne actually delivered was deemed underwhelming by the majority of industry commentators as he brushed past green issues and thew his weight behind shale gas and other fossil fuels. Read the full report from today’s Autumn Statement here.

Key points

– The Chancellor appeared to back fracking by confirming proposals for a Shale Gas Sovereign Wealth Fund, which will be funded by the proceeds of shale gas.

– The full Autumn Statement document produced by the Treasury reveals a new £31m fund for “sub-surface research test centres” along with £5m to “ensure the public is better engaged in the regulatory process”.

– Osborne cut the main supplementary tax rate for North Sea oil from 32% to 30%, fuelling acusations of a ‘dirty budget’.

– Perhaps most distubring was Osborne’s complete avoidance of any green issues or renewable energy. He also recieved criticism for his ‘soft’ promise on flood defence spending, which fell short of what many expected.

– The full Autumn Statement document produced by the Treasury says the Government will look into the potential of a tidal lagoon project at Swansea Bay.

Industry reaction

David Powell, senior economics campaigner, Friends of the Earth

“The Chancellor has served up plenty of environmental gloom – with precious little silver lining.

“Mr Osborne yet again put powerful interests and big polluters ahead of our health, homes and wellbeing. “The Chancellor has cut tax for dirty gas and oil, despite overwhelming scientific evidence of the need to end our fossil fuel dependency.

“George Osborne’s response to Britain’s filthy air and heat-leaking homes that kill tens of thousands of vulnerable people every year is to build new roads and ignore calls for a comprehensive energy efficiency programme.

“We have the ingenuity and resources to overcome the challenges we face and create an economy that benefits us all – but once again the people pulling the levers of power have let us down.”

Patrick Harvie, Green MSP for Glasgow and Co-convener of the Scottish Greens

“The Chancellor’s delusional optimism about the state of the economy shows how out of touch this Coalition is. Osborne and his Libdem helpers have encouraged an economy in which people have no job security and no decent pay, and the cuts to welfare are embedding poverty in our communities.

“Despite the clear opportunities which exist for green investment to create quality jobs, cut household fuel bills and reduce carbon emissions, we again see Westminster politicians pouring money into roadbuilding and falling over themselves to offer tax breaks to wealthy oil firms whose profits we already subsidise by a billion pounds a year.

“With Miliband and Balls still signed up to the austerity agenda it is increasingly clear we need more Green voices at Westminster to argue for a balanced economy, with better jobs and decent public services.”

Dr Doug Parr, chief scientist, Greenpeace UK

“In what looks like the warmest year on record, George Osborne has strikingly failed to shield the UK economy from climate change and grasp the opportunities of a modern clean-tech economy.

“Some communities will be relieved to hear that flood budgets have now been allocated to projects, but the bill is set to outstrip the funding pot as temperatures continue to rise. The Government must commit to tackling the symptoms and the causes of our increased rainfall by dealing with global warming emissions.

“The Chancellor should have announced a nationwide programme to upgrade Britain’s draughty homes, making them fit for 21st century and creating jobs in every constituency. Instead we get a 1980s-style road building programme and tax breaks for fossil fuel giants that will entrench the high carbon economy we should be moving away from.”

John Alker, director of Policy and Communications, UK Green Building Council

“For years we’ve been told by Treasury that Stamp Duty cannot possibly be touched. But today’s changes blow a hole in that theory. This represents the mother of all missed opportunities, to link Stamp Duty payments to the energy performance of the property – incentivising householders to take action, and firmly establishing energy efficiency within the house buying and selling market.

“For many households the changes will offer a welcome upfront financial saving when buying a house – but it could so easily have also helped to tackle long-term household energy bills. Osborne could so easily have killed two birds with one stone.”

Brian Smithers, strategic development director, Rexel 

We didn’t see much said on energy, but the government has acknowledged the importance of providing a secure energy supply in its commitment to nuclear, shale gas and support for energy companies. It is a shame there has not been similar enthusiasm for renewables – given their importance we would have liked to see at least an acknowledgement of their role in the UK’s future.

The government have agreed a price of £92.50 for every megawatt hour of energy produced by the new Hinkley Point C nuclear power station – almost twice the current wholesale cost of electricity. There is no reason why couldn’t have done a similar deal for renewables.
Whilst solar and wind are not yet seen as competitive with coal and gas on a per kilowatt hour basis, they could be with the right investment.

Furthermore they have more to offer than the usual arguments suggest. With power plants close to capacity, adding renewables – particularly in home renewable energy – to the mix can avoid the need to turn on another power station – an expensive way of dealing with a 10% energy increase each evening. In this situation, renewables generating energy where it is needed (in line with previous government statements) is a far better solution in the long-term.

Autumn statement 2014: As it happened on Twitter

Osborne was criticised for his weak commitments to flood defences, by Friends of the Earth campaigner Guy Shrubsole and Greenpeace.

The chancellor was also slammed by Alistair Harper from the Green Alliance for his tax breaks for oil and support for shale gas

There was a broad consensus that Osbrone was threatening a renewable future by incentivising investment in a ‘dirty’ infrastructure.

In summary, it was a roundly disappointing Autumn Statement, particularly for the renewables industry, which has seemingly been forgotten about by Mr Osborne.

Brad Allen

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