UK Budget Spring 2010

Good but could do better – from a green perspective..

Chancellor Alistair Darling’s final budget contained some good news for green consumers and green businesses, although some said it did not go far enough in transforming UK into a sustainable economy.

Business benefits included:

• A £2.5 billion one off growth package for small businesses.
• Support for ‘fledgling’ businesses through a temporary increase in small business rate relief.
• launch of ‘UK Finance for Growth’ and more public sector contracts for SMEs

Regarding low-carbon growth, the off-shore wind and nuclear capacity dominated, [is nuclear really green?] but there were also announcements on low carbon investment and ‘green jobs’

• A summer consultation on how to provide more certainty for low-carbon investment – concrete proposals in autumn – white Paper by spring 2011.
• Green Investment Bank, to fund low-carbon infrastructure (emphasising off-shore wind) – consultation in summer.
• Launch of UK Finance for Growth to streamline the Government’s SME finance support – including small and medium low-carbon technology businesses
• Support for UK offshore wind industry [this will really help to decarbonise the UK electricity grid]
• Commitment to reduce government carbon emissions by 30% by 2020 [More on this below.]
• Pay As You Save offerings to help householder with upfront costs of microgeneration and energy efficiency. [More on this below.]
• Halving company car tax for ultra-low carbon cars for 5 years

Looking at the microgeneration sector in particular…

• UK Finance for Growth (UKFG). Support for low carbon SMEs /   investment / growth in UK low carbon supply-chain businesses to enable those developing new low carbon technologies to take them from ‘concept to commercialisation’. [This fills a much needed gap] UKFG will work in partnership with DECC and Regional Development Agencies to coordinate all public low-carbon SME equity schemes. Low-carbon businesses will also be able to access financial support from the wider £4 billion stock of SME finance products overseen by UKFG, where appropriate. UKFG will also join the Low Carbon Innovation Group, the body established to agree an overall strategy for the Government’s low-carbon grant programmes.
• Separately, the Government continues to work with UK banks and the EIB to ensure that small businesses will be able to access up to £4 billion of EIB funds by the end of 2011.
• More technologies will be included in the Enhanced Capital Allowances (ECA) scheme, including two new sub-categories – for ‘self-driving’ magnetic motors and biomass air heaters. [It is a pity the the outdated criteria used for eligibility for ECA excludes the most sustainable technologies.]
• Emissions reduction plans for individual Government departments. Leading to savings of £300 million per year by 2012-13, all departments will be required to publish individual carbon reduction plans through to 2020, enabling a minimum 30% reduction in estates and operations emissions between 1999 and 2020. [Long overdue.]
• Development of Pay As You Save offerings, A joint ‘Pay As You Save’ forum between Government and consumer finance providers will be set up to enable consumers to cover the upfront costs of microgeneration and energy efficiency measures. These loans will allow householders to pay back the money borrowed to fund the installation from a portion of the money saved on bills or revenue from CECB below. [Great news!].
• Clean Energy Cashback. Clean Energy Cashback is given a mention in the report but we don’t learn anything new – there is just confirmation that electrical feed-in tariffs (FIT) will be available from 1st April 2010, subject to state aid and parliamentary approval, and that the consultation on the Renewable Heat Incentive (RHI) has been published, including the proposal that incentive payments should be exempt from income tax. Carbon-saving estimates for the two schemes (FIT’s and RHI by 2020 are 7 MtCO2 for Feed-in Tariffs and 60 MtCO2 for the Renewable Heat Incentive. [Which shows just how important renewable heat is to UK!]

Hope this is useful! My immediate comments are in square brackets. Barry Johnston.