By Paul Davies and Michael Green
The Autumn Statement (the Statement) highlighted sustainability of public finance as key to securing a strong and stable economy for the UK. The need to prioritise longer-term sustainability schemes over short-term economic gain was also referred to by the Environmental Audit Committee (EAC) in a recent report.
The Statement, which is the last of its kind, does introduce a new fiscal framework designed to make public finances more sustainable, while providing the flexibility required to support the economy in the short-term.
However, five fundamental areas raised by the Environment Services Association (ESA) to enable the UK to meet its environmental obligations have been omitted from the Statement, namely: extended producer responsibility (EPR) reform; green investment allowances; green public procurement; landfill tax; and Environment Agency support.
However, notwithstanding these exclusions, key environmental policies highlighted in the Statement include:
- Investment in the energy sector – more than £100 billion of private investment is expected to be injected in the UK’s energy sector over the next 15 years, providing new cleaner generating capacity, upgrading to a smarter energy system, and developing new resources such as shale.
- The Shale Wealth Fund – the fund will supply up to £1 billion of further resources to local communities, in addition to industry schemes and other sources of government funding. Local communities will determine how the money is best spent in their area.
- Levy Control Framework – the government will continue to engage stakeholders as it prepares its emissions reduction plan to decarbonise the economy, whilst limiting further costs on energy bills. The future of the Levy Control Framework will be outlined in the 2017 Budget.
- Carbon Price Support – the cap on Carbon Price Support rates will be set at £18 t/CO2, uprating this with inflation in 2020-21. The government will continue to review how the carbon price is determined in the 2020s.
- Flood defence and resilience – £170 million will be committed to flood defence and resilience measures. £20 million of this investment will be allocated to new flood defence schemes, £50 million for rail resilience projects, and £100 million to enhance the resilience of roads to flooding.
- Future transport – £390 million will be advanced to support ultra-low emission vehicles (ULEVs), renewable fuels, and connected and autonomous vehicles (CAVs) by 2020-21. In addition, 100% first-year allowances will be provided to companies investing in charge-points for electric vehicles. While the Statement recognises the importance of aligning public finances with sustainability, a number of environmental groups have described the Statement as a “huge missed opportunity for the UK to show the global leadership and urgency needed to protect our planet”. It also appears the Statement is less focused on environmental concerns compared to the 2015 Autumn Statement, a potentially concerning development in the light of the increasing importance of environmental issues and the rapid growth of new technology that has the potential to assist in mitigating our environmental impact.
This post was prepared with the assistance of Ashleigh Humphries in the London office of Latham & Watkins.
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