Wednesday saw the new Chancellor of the Exchequer (Philip Hammond) give his first autumn statement – also the first post-Brexit budget statement.
One of the most significant aspects is not in the official document but in the speech and that is the abolition of the Autumn Statement and the moving of the Spring Budget to the autumn. By having an autumn budget changes in tax will be made ahead of the start of the tax year. There will still be a spring statement in 2017 – but the main budget will be in the autumn.
From the energy & carbon viewpoint the Autumn Statement was very much a non-event.
Word count (number of times relevant words appeared in the statement):
Fuel – 13; Energy – 7; Gas – 5; Oil – 6; Carbon – 4; Electricity – 0.
A notable absence was the word climate it appeared once in “economic climate” and once in a table referring to Climate Change Levy in the appendix.
In the commentary on the economy it was acknowledged that the UK has been impacted by rising fuel prices.
The post-referendum sterling depreciation has amplified the effect of global oil price rises, increasing the contribution of the energy and transport components to CPI (Consumer Price Index) inflation.
Let’s look in more detail at the relevant parts of the statement with my added emphasis and notes:
- Economic infrastructure (transport, energy, flood defences, water, waste, and digital communications) is crucial for the economy and for people’s daily lives. The government has put infrastructure at the heart of its economic strategy and has set up the National Infrastructure Commission (NIC) to provide expert advice on the country’s strategic infrastructure needs and independent recommendations on how to meet them.” Over the next 15 years, more than £100 billion of private investment is expected in the UK’s energy sector, providing new cleaner generating capacity, upgrading to a smarter energy system, and developing new resources such as shale.
- Levy Control Framework – The government is committed to decarbonising the economy while limiting costs on bills, and will continue to engage stakeholders as it develops an emissions reduction plan. The government is considering the future of the Levy Control Framework which it will set out at Budget 2017.” National Audit Office Report
- Carbon Price Support – To provide certainty to businesses, the government confirms it is maintaining the cap on Carbon Price Support rates at £18 t/CO2, uprating this with inflation in 2020-21. The government will continue to consider the appropriate mechanism for determining the carbon price in the 2020s.
- Shale Wealth Fund – Following a consultation to ensure local communities share in the benefits of shale production, the Shale Wealth Fund will provide up to £1 billion of additional resources to local communities, over and above industry schemes and other sources of government funding.
- Science and Innovation Audits – The government has selected 8 areas for the second wave of Science and Innovation Audits, which includes the Offshore Energy Consortium. (No details yet.)
- Fuel duty – The fuel duty rate will remain frozen for the seventh successive year, saving motorists around £130 a year compared to what they would have been paying under the pre-2010 escalator.
- Oil and gas – To ensure a stable tax regime that maximises economic recovery from the North Sea, the government recommits to Driving Investment, the long-term plan for the oil and gas ring-fence fiscal regime, and will simplify the reporting process and reduce the administrative costs of Petroleum Revenue Tax for oil and gas companies.
- Future transport – The NPIF (National Productivity Investment Fund) will invest a further £390 million by 2020-21 to support ultra-low emission vehicles (ULEVs), renewable fuels, and connected and autonomous vehicles (CAVs). This includes £80 million for ULEV charging infrastructure, £150 million in support for low emission buses and taxis, £20 million for the development of alternative aviation and heavy goods vehicle fuels, and £100 million for new UK CAV testing infrastructure. In addition to the tax incentives for ULEVs in company tax and salary schemes set out in the tax chapter, from today to the end of March 2019 the government will also offer 100% first-year allowances to companies investing in charge-points for electric vehicles.
What can conclusions can we draw from the Autumn Statement?
I have five take-aways from the statement:
- There is nothing relating to energy in the statement that requires immediate action by end users
- Plans for decarbonising the economy are in a state of flux
- Shale gas is to be actively supported
- Climate change and sustainability are now far lower on the government’s priority list than ‘short term’ economic issues.
- If your company is thinking about electric vehicles – consider investing in charging points – 100% capital allowances