- The Chancellor will present the Spring Budget on 15 March.
- The UK is lagging peers when it comes to investment in green technology. This could lead to yet another missed opportunity for job creation and economic growth.
- To achieve net zero, more needs to be done to incentivise a transition in the energy sector.
- No amount of money will make a difference in achieving net zero unless we address efficiency shortcomings.
Achieving Net Zero To Boost Economic Growth
There is no greater opportunity to position the UK economy for success in the future than the push toward net zero. The UK is lagging its peers when it comes to committing to growing green technology, and that will leave us on the back foot when these technologies are scaled up in the coming years.
Now’s the time to play catch up or risk being left behind in yet another key trend that would open the door to economic growth.
Windfall Tax Reform
Investment in the development of cleaner, greener energy should be a major focus for the upcoming budget. Not only to pave the way for prosperous economic growth in the future, but to ensure energy security as well. There are a variety of ways the budget can address this, but one small tweak that could have a huge impact is revamping the EGL to allow an investment allowance for clean energy technology.
Oil and gas producers were given the opportunity to offset their windfall tax through investment in new projects—it makes little sense not to extend that same courtesy to those working on trimming the UK carbon footprint.
The EGL isn’t the only windfall tax in need of a re-think. The oil and gas levy as it stands is a missed opportunity to push the sector to trim its environmental impact. Allowing these companies to offset their tax obligations with new investment is short-sighted. The offsets should be designated for specific, low-carbon projects, thus incentivising a faster shift toward cleaner energy production from the majors.
Recommit To HS2 With Transparency And Disclosure
The spring budget also gives Sunak’s government the chance to move forward on the UK’s net zero ambitions with renewed commitment to HS2. The project’s been plagued by delays and rising costs, but a clear and transparent disclosure of the government’s plans—particularly its procurement plans—would go a long way. It would give UK businesses the opportunity to position themselves to win contracts and move the project forward in a way it hasn’t done since its inception.
Address Energy Efficiency And Improve Existing Schemes
If net zero is the aim, though, throwing money at the green economy is merely a band aid on a broken leg. To truly put the UK in a position to achieve net zero by 2050, we need to address energy efficiency.
Uptake on existing efficiency upgrade schemes has been poor. A more accessible programme that focuses on improving insulation across the board is essential. So far only a third of the £6bn pledged through 2025 has been spent—doling out a further £6bn is meaningless if no one claims it and it’s rolled back into treasury funds.
Article by Laura Hoy, ESG Analyst at Hargreaves Lansdown