Budget will include measures to spur low-carbon industrial growth, Chancellor vows
Chancellor Jeremy Hunt has stated that supporting low-carbon industries, along with tech and life sciences, will be crucial to ensuring a more innovative and stable UK economy in the long-term and to levelling up.
Hunt delivered a speech at Bloomberg’s European headquarters in London this morning (27 January), setting out a ‘Growth Plan’ ahead of his Budget in mid-March. The Plan did not include any new funding or changes to regulation or legislation, which we will need to wait for. We can expect the creation of investment zones and more measures to devolve innovation investment decisions, alongside new funding for sectors including steel.
For now, we know that the Growth Plan consists of four “key pillars” against which the Budget is being designed – enterprise, education, employment, everywhere.
“Just as our plan to halve inflation will require patience and discipline, so too will our plan for prosperity and growth,” Hunt said. “But it is also going to need something else which is in rather short supply – optimism that we can get there.”
He argued against “declinist narratives” and stated that, in discussions about the economic fallout of Brexit, critics often selected statistics which do not “show the whole picture”.
The Chancellor said: “We need to make Brexit a catalyst for the bold choices that will take advantage of the nimbleness and flexibilities that it makes possible.
“When it comes to the innovation industries that will shape and define this century, the UK is powerfully positioned to play a leading role.”
Along with digital technology and life sciences, Hunt named low-carbon sectors such as renewables and nuclear energies as one of these industries. He spoke of a $1trn market opportunity between now and 2030.
Hunt bigged up the fact that the UK currently hosts the world’s largest offshore wind farm, Hornsea 2, and that it is targeting 50GW of offshore wind capacity by 2030. He also highlighted the Government’s recent decision to give the green light for the Sizewell C nuclear power plant and to take a larger stake, as it works to bridge the ‘nuclear gap’ and ensure that 25% of UK electricity generation is nuclear by mid-century.
Much of the speech was dedicated to optimism and to highlighting good progress, but Hunt said the Government “should also be straight about [its] weaknesses” regarding economic growth. “Confidence in the future starts with honesty about the present,” he elaborated.
He pointed to several “structural issues” including the “over-concentration of wealth in the South East” and skills gaps in key sectors including the green economy. He argued that these can and should be addressed in tandem.
Hunt said that the Government is preparing new measures to make university courses offered in key innovation sectors in the UK as attractive as they would be in leading nations abroad. He also spoke of the need for better non-university education options. There was no confirmation of an update to the long-outdated overarching skills strategy or a specific strategy for green skills.
Also covered in the speech were measures to increase private investment regionally by creating dedicated investment zones and devolving more decision-making powers to local governments and civic entrepreneurs, who Hunt wants to “find and fund their own solutions without having to bang down a Whitehall door.” Additionally mentioned was the need for better digital and physical connectivity.
There will doubtless be many in the UK’s green economy who will argue that Hunt was far from honest about the state of play with cleantech and green skills.
Last month, PwC revealed that while almost three times as many ‘green’ jobs were advertised in the UK in 2022 than 2021, with new opportunities abound in Scotland, the South West and North West, the North East still risks being left behind. Moreover, there were still not enough roles created to plug gaps in sectors such as retrofitting for energy efficiency, which are ready to scale rapidly in the near term.
And just days ago, the director-general of the Confederation of British Industry (CBI) Tony Danker delivered a scathing speech arguing that the UK is “falling behind rapidly” in the “global race for green growth” as the US and EU increase subsidy packages.
Danker spoke of a £4.3bn opportunity between now and 2030 being squandered. He called for the Conservative Party to replicate the success of offshore wind for existing technologies and interventions; for more funding for less mature technologies; for planning reform and for careful consideration of plans to sunset EU laws post-Brexit.
Green economy reaction
edie reached out to the CBI for an updated comment on Hunt’s speech today. Danker said: “There is much to get behind here with the Chancellor’s emphasis on using innovation as the foundation of the UK’s future economy and championing the strengths of the UK tech sector.
“He now has a strong framework for growth. And we hope the Budget in less than two months will show strong actions to move us forward.”
RenewableUK’s executive director of policy Ana Musat has stated that we need clearer measures on curriculum reform to close green skills gaps, combined with new direct financial support for clean technologies that will help unlock private finance.
Musat said: “Hunt must ensure that the UK can compete on a level playing field with the US and the EU, both of which are offering generous stimulus packages to attract private finance from the innovative companies which are spearheading the clean energy transition. The Chancellor needs to provide businesses with clarity on how the UK will bring forward new renewable energy capacity, bolster clean energy supply chains and maximise investment in skills.
“As a first step, the Chancellor should use the Spring Budget to announce a reform to our capital allowances regime to avoid Britain losing out in the global race for investment. Even if we can’t match the US’s tax breaks, we need to compensate for this with an attractive policy and regulatory environment: planning reform to enable quick deployment, reducing disruptions to electricity markets through sudden policy changes like the imposition of the Electricity Generator Levy, as well as investment in key infrastructure including ports and the transmission grid.”
The Association for Renewable Energy and Clean Technology’s (REA) chief executive Nina Skorupska took a similar view. She said: “It is welcome to hear recognition from the Chancellor that further deployment of renewable energy and clean technology can offer huge growth and economic benefits – a point recently also highlighted by Chris Skidmore’s Net-Zero Report.
“However, these warm words must urgently be reinforced by policy, and a continued lack of certainty has risked sending the wrong signals to low carbon investors. The REA stresses that growth in our sector is not guaranteed to continue without commitment from government, and the upcoming Spring Statement must be used to ensure an attractive market for global green investment in the UK.”
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