There were a lot of good green measures in the Budget and the government deserves credit for recognising the vital role that net zero transition will play in determining our future prosperity. Not just building back stronger but building back greener, with reference clearly made to the role the headline announcement of Freeports will have in supporting the delivery of the UK’s clean energy revolution.
But did it go far enough? Was this Budget green tinted rather than green focused? The mix of fuel duty freezes with what some commentators consider diluted green infrastructure investment doesn’t quite square up to the green rhetoric. The Chancellor noticeably livened up when it came to Freeports – a policy that Rishi Sunak championed well before his current role.
With four on the south coast, one airport centred freeport on the East Midlands and only three in the North, it was perhaps politically significant that the Chancellor focussed on those Northern freeports in his speech and the role they will play in the levelling-up agenda.
There is great potential for all those successful bidders to transform into industrial and technological hubs. The Northern locations in particular will have the added advantage of the Treasury being close at hand in Darlington and the UK Infrastructure Bank sited in Leeds.
The leader of the opposition was quick to point out the irony of a government that, less than four years ago, sold off a Green Investment Bank to the private sector, only to launch the UK Infrastructure Bank with a green investment remit this time round with a goal of using £12bn of capitalisation to mobilise £20bn of investment in conjunction with the private sector.
Although, in fact, the detailed remit of UKIB is broader and prospectively more flexible than GIB and its more distant predecessor the Treasury Infrastructure Finance Unit which was launched to address potential market failure in the aftermath of the Global Financial Crisis. UKIB is intended, working alongside the National Infrastructure Commission and the Infrastructure and Projects Authority, to “crowd in” rather than crowd out private capital in the delivery of broad policy objectives and is arguably ambitious in this respect.
The launch of a green retail bond, a sizeable new green gilt programme, and confirmation that the Bank of England will have a clear additional net zero mandate together with more R&D funding and attractive tax breaks for businesses investing in new, more energy efficient, equipment is also welcome.
The fact that the UK Infrastructure Bank will be able to borrow and will be tasked with driving the development of net zero projects is a big step forward, but a recent report from the LSE proposed using £22bn to mobilise £80bn of capital, while France and Germany have both announced green stimulus plans worth €30bn and €40bn respectively.
Nothing much was said on agriculture, aviation, shipping and very little on rail, regional development, electric vehicles, or onshore renewables. The Green Homes Grants scheme wasn’t mentioned at all. Those measures that were announced focused on long term investment, which will do little for emissions savings in the short-medium term.
Many may have expressed disappointment with the measures announced, but compared to what the Budget could have been if the deficit was considered king, while it may not have been the full spectrum green recovery strategy some were calling for, it was a step in the right direction.