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Budget measures lack lustre in run up to COP26

Published October 29, 2021

Budget measures lack lustre in run up to COP26

The UK Chancellor Rishi Sunak Budget speech failed to set out the fiscal measures needed to implement the Government’s Net Zero Strategy, according to prominent environmental business organisations.

While the new measures announced in the 2021 Budget included increased funding to encourage electric vehicle manufacturing, green skills and low-carbon shipping, Sunak kept fuel duty rates frozen and announced a cut for domestic aviation fuel duty.

On the other hand, the Budget included £1.6bn to introduce new T-level courses in England for those aged 16 to 19. T-levels are two-year courses designed to help young people learn practical skills. Sunak also announced £550m for reskilling adults and £170m for apprenticeships

Other measures of interest to businesses included the introduction from 2023 to 2035 of a rate relief scheme to encourage businesses to install solar panels and battery storage infrastructure. A total exemption will apply to heat network installers.  SMEs will be eligible for £520m to buy software and train staff.

But the reaction from environmental business associations was muted. Executive director of The Aldersgate Group Nick Molho commented: “Coming a week after the welcome publication of the Government’s Net Zero Strategy and its Green Finance Roadmap and a week ahead of COP26, it is disappointing that the Chancellor’s Budget contained so few references to the Treasury’s role in supporting the UK’s net-zero transition and its other environmental ambitions.

“The Chancellor’s commitment to increase investment in skills and education is welcome but significant attention must now be given to putting together a comprehensive low carbon skills strategy, which will ensure that students and those already in the workplace are both equipped with the skills they need for a net-zero economy. This must include a comprehensive response to the key recommendations recently made by the Green Jobs Taskforce.”

The Association for Renewable Energy and Clean Technology’s (REA) 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. 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.”

“It was never going to be an environmentally focussed Budget given the economic circumstances, but nevertheless it was perhaps a bit disappointing given the proximity to the COP,” said Alfa Energy’s corporate affairs officer, Jeremy Nicholson. “In fairness to the government, some increases in expenditure to support CCS, low carbon heat, hydrogen, new nuclear, etc, had already been announced in advance, so perhaps there wasn’t that much left to say on Budget day. It’s always possible that there may be a rabbit or two left in the hat for announcement during the COP.  If so, we’ll find out soon enough.”