Reflections on a spring statement where the green policies are yet to bloom 

It was a Spring Statement (or “Budget” to many) focused on four E’s – everywhere, enterprise, employment, and education. But this left many wondering about a fifth E – environment. While there were smatterings of detail about the future of green policy in the UK, it was arguably not enough to deliver against the IPCC’s recent warning: act now or it’s too late.

 

The way the government focussed on making sure people have enough money to pay their energy bills, rather than implementing long-term clean energy policies makes it clear that this was a Budget for the imminent problems.

 

So, what was covered and what does it mean for UK business? The Weber Shandwick sustainability team takes a look.

 

Nuclear is the priority energy source – for now

 

For a government with a long history of championing hydrogen, there was strangely no mention of it in this Budget. The real winners in the energy sector were Carbon Capture and Storage (CCS), who received a £20 billion investment injection, and nuclear, who have been reclassified or rebranded as “environmentally sustainable”.

 

For businesses, the changes will enable critical investment into these areas, opening up new jobs and supporting the growth of key green industries.

 

However, the decision taken, on nuclear especially, begs the question of whether it is right to focus on speculative, long-term innovations when we’re in an energy crisis and need stability. Views on the merit of nuclear also differ. For example, within the EU, France is a huge supporter, whilst Germany, Austria and Luxembourg hold concerns about nuclear’s radioactive waste and safety.

 

For the UK specifically, all announcements should be taken with a pinch of salt. Over the next 18 months, we’re unlikely to see legislation introduced that has enough time to pass through parliamentary processes and be enacted into law before a new Government is possibly elected. One wonders, therefore, if these commitments will deliver any real long-term value to the UK’s green economy.

 

For the moment, we’ll have to wait and see whether the government commits one way or another, but these investments alone definitely put a stake in the ground as to their direction.

 

Britain’s Green Day leaves businesses wanting

 

Life sciences and AI were undoubtedly big “innovation” winners in this Budget. Initiatives, such as Chancellor Jeremy Hunt’s “full expensing policy”, which will allow companies subject to corporation tax to claim up to 100% of the cost of the investment, could drive growth for many green businesses. However, some argue this is a short-term appeasement and likely won’t deliver real investment in the long run.

 

Concerningly, there was only one brief mention in the Chancellor’s speech outlining the need for the UK to respond to the US’ Inflation Reduction Act. The Act invests billions into green tech and domestic energy production, and it’s something already attracting a lot of interest (along with reported investment), which businesses in the UK and EU are keeping a close eye on.

 

With the EU developing the “Green Industrial Plan” in response, the UK Government was under pressure to present a viable option at home. In this Budget, Hunt announced “Green Day”, which is expected to measures to protect British jobs in industries such as electric vehicle production from the US and EU offers. The fact that we’re still waiting on the detail of this plan though does little to provide reassurances to businesses looking for guidance and stability.

 

Among others, Labour has been quick to criticise the Government for an underwhelming set of announcements with no clear roadmap, highlighting that the UK is well behind Germany, France, the US and the EU.

 

What happens next?

 

Labour have now got to live up to its own commitment of “greening” all policies, and with their response centred around mission-focussed policymaking, they must now present their own costed proposals, backed up with detailed roadmaps.

 

The energy price cap and expected fuel freeze (now frozen for its 13^th year!) have been welcomed by consumers across the UK who are contending with the cost-of-living crisis. However, despite being vote-winning policies, these make no progress towards a longer-term, sustainable rethink of the UK’s energy mix. As we go into next winter, with a General Election and cash-strapped voters to answer to, this Government may not fare so well in their final Budget.

 

We are expecting more announcements soon, including a new energy strategy and updated Net Zero Strategy after the initial plan was deemed unlawful. If the UK is to keep up with our international peers, it is imperative for the Government that the ambition of these two strategies matches, or even exceeds, the other international frameworks we’ve seen.

 

All in all, what does this mean for the future of sustainability? The short answer: it is business as usual. There are some exciting new opportunities in the form of CCS and the focus on nuclear may improve the UK’s energy security in a decade or so, but they don’t do much to guide businesses on green policy and investment long-term. They are also still subject to what remains slow regulatory processes.

 

For now, industries are left with little clarity on short-medium term plans to transition sectors, regions and supply chains to Net Zero. Any real progress will be in the next Government’s in-tray after the General Election next year. It is up to that Government (and the businesses in partnership with it) as to whether to view this as a problem, or an opportunity.