Budget stalls, green ambitions losing pace
The coalition manifesto promised: “a full programme of measures to fulfil our joint ambitions for a low carbon and eco-friendly economy”. But the coalition’s first Budget offered little more than a passing reference to the Green Investment Bank, future reforms to the price of CO2 and a renewed promise on energy efficiency.
No green “full programme of measures” emerges, instead we get old style, big picture macro-economics. A 4% cut in corporation tax over this Parliament, reversal of NIC increases, and a regional growth fund for new business from next April, that “will help provide a stable economic foundation for private sector growth”.
But for the form, function and funding of the Green Investment Bank, so urgently needed to drive £200billion into clean energy by 2020, we will have to wait. After the Spending Review, “The Government will put forward detailed proposals on the creation of a Green Investment Bank to help the UK meet the low-carbon investment challenge. The Government is considering a wide range of options for the scope and structure of the Green Investment Bank.” But there’s no confirmation of legislation (and this is still a risk) and no mention of capitalisation.
Controversially, Labour had intended to provide the first £1bn funding for the Green bank from the sale of High Speed 1. Now, we learn that the sale of HS1 is “part of a wider programme of asset commercialisation over the next 12 months.” Affiliates will be dismayed at the prospects for job security and safety issues involved in the sale of the National Air Traffic System.
Clearly, with the recession hitting the price of carbon, the government is right to review carbon pricing. It proposes to reform the climate change levy in order to provide more certainty and support to the carbon price, with legislation in 2011. The Chancellor will need to heed new evidence from a joint TUC/EUIG study that the UK’s energy intensive industries – from steelmaking to ceramics – are already hard hit by climate change energy policies.
Cancelling the £80 million loan to Sheffield Forgemasters last week looks increasingly badly handled. The new plant would have helped re-establish Sheffield as a centre of high quality steelmaking, not just for nuclear components but for any major specialist steels for low carbon industries – wind turbine components, for example. With nothing in the Budget on the Green Deal for households, we must wait until legislation in the Energy Security and Green Economy Bill this autumn. The low carbon industrial strategy is in serious danger of losing pace and direction.