The Chancellor just unveiled the first fiscal plan of Andy Burnham’s premiership, under extremely tight financial pressures, with mixed responses.
The Chancellor just unveiled the first fiscal plan of Andy Burnham’s premiership, under extremely tight financial pressures, with mixed responses.
Headline news from John Healey’s Autumn Budget announcement yesterday is that all homes in council tax bands A to D in England will receive a £100 one-off Household Energy Payment to help alleviate rising bills. This will be funded by a 3% rise in windfall tax on banks, which is lower than many in the financial sector had feared.
Equivalent funding will be made available to devolved governments in Scotland, Wales and Northern Ireland, although the respective parliaments will decide how cash is administered and distributed. As of January, Ofgem’s price cap on gas and electricity tariffs will see households face annual bills of £2000 or more.
More relief is also due through the scrapping of standing charges on gas services, the unpopular daily fixed fees. However, despite treasury estimates putting a £45 saving per year for 60% of customers as a result, suppliers will be able to shift the lost revenue onto per unit costs, which many believe could render the change negligible. Higher users, including low income families with many members, will be worse off. Electricity standing charges will be removed at a later date.
‘A £100 rebate for households in Council Tax bands A to D, is welcome and vital, but it remains a sticking plaster approach to the UK’s exposure to volatile international gas markets. Much greater investment is needed to rapidly reduce our reliance on expensive gas by insulating the nation’s heat-leaking homes and rolling out heat pumps at scale – funded by higher taxes on the super-rich gas and oil firms, rather than the £1 billion cut to the Warm Homes Plan made in the Budget,’ said Mike Childs, Head of Science, Policy and Research at Friends of the Earth.
‘Removing standing charges from gas bills will offer some relief, but it risks penalising those on lower incomes and older and disabled people, who might need more energy because of medical needs or because their homes are poorly insulated,’ he continued. ‘Bolder action is needed to bring bills down, including removing all existing policy costs from electricity and breaking the link between electricity prices and the cost of gas. Promises for radical reform of energy markets are welcome but they must be turned into action after years of delay.’
There was also the promise of longer term reform for energy from 2027 onwards, with the introduction of a new comprehensive framework at the next spending review, ensuring sustained reductions in costs to the public over the next decade. There will also be no further regulatory changes that could drive prices higher until that time. Exposure to unpredictable gas and oil prices will become more limited by 2028-2030. The gas shippers obligation and levy to fund hydrogen projects is being scrapped, too, with funding for this coming directly from the Treasury instead.
‘I always welcome ambition in the energy space and good to see it as a focus, but will these reforms deliver lower bills and get viable clean energy projects connected sooner? Moving existing renewables onto well-designed fixed-price contracts could give generators greater certainty and protect consumers against gas price spikes. But that reduces our exposure to gas prices; it does not remove it altogether,’ said Sonya Bedford MBE, partner at law firm Spencer West LLP. ‘The contract terms must deliver value for consumers while respecting existing financing arrangements and power purchase agreements, which were entered into with good faith and a fair amount of struggle to get there.’
The public will also benefit from an extension of the existing 5p cut in duty on petrol and diesel. This policy measure had been introduced in 2022 by then-Prime Minister Rishi Sunak as temporary support but has continued ever since. It was due to be axed at the start of next year. Its continuation would mean drivers are still paying the levy at 52p per litre. Cheaper EV charging at local, lower-powered charge points featured in the budget announcement, too.
Other details include increased budgets for the National Wealth Fund and British Business Bank, recapitalisation to support 140,000 jobs across advanced manufacturing, AI, and clean energy, and full commitment to delivering the findings of the Fingleton Nuclear Regulatory Review. Greater fiscal autonomy is coming to all elected mayors and 10 additional devolution agreements are on the cards, eventually meaning over 90% of England’s population will live within a devolved regional authority boundary.
‘What matters now is creating the conditions to turn those ambitions into investable, deliverable projects, with greater certainty for the organisations being asked to plan, finance and deliver them,’ said Mott MacDonald Group Strategy Director and Regional Managing Director for the UK and Europe, Richard Risdon. ‘Giving mayors greater control over funding creates a real opportunity to join those decisions up, matching investment and skills more closely to what individual places need.
‘Today’s Budget reinforces the central role infrastructure will play in the UK’s economic growth and resilience,’ he added. ‘From clean energy and housing to increased defence investment and the expanded role of the National Wealth Fund, there is a clear focus on mobilising investment in infrastructure and industries the UK will need for the future.’
Finally, planning will see a number of changes, not least the removal of biodiversity net gain requirements for smaller housing developments on brownfield land, bringing project costs down for developers. It is hoped this will catalyse a rise in the number of affordable homes being built. Grid connection times will be cut, too, speeding up the wait for infrastructure such as renewable energy to be brought online, helping support energy measures.
‘Brownfield land can also be home to some of our rarest and most unique habitats. And this latest exemption should mark the end of further watering down of Biodiversity Net Gain,’ said Catherine Spitzer, CEO of Environment Bank. ‘BNG is now bedding in across the development sector and providing long-term private investment for nature recovery. With nationally significant infrastructure projects coming into scope from November, the priority now should be making the existing framework work well. The government noted only this week that BNG was a world leading policy to leave biodiversity in a measurably better state. In order to deliver on this, developers need certainty, and nature needs consistency.
‘Today’s announcement of plans to accelerate grid connections and invest in a more flexible energy system is welcome, but its impact depends on whether businesses can actually use it. Hire companies supply equipment across construction, events and production, so eligibility needs to reflect how these sectors operate,’ said Sonya Bedford MBE, Partner at law firm Spencer West LLP. ‘Investment in equipment also needs to be matched by smarter use. A generator running unnecessarily is still burning money and fuel, however modern it is. Understanding demand and measuring performance are essential to turning investment into meaningful savings,’ she added.
Image: Nick Kane / Unsplash
More on UK energy policy:
Efficiencies over new technologies: UK energy policy and demand
Tories would slash and burn Environment Agency, Natural England, net zero
Burnham’s publicly-owned grid firm emphasises private sector utilities failure
