Although the days preceding Philip Hammond’s first Autumn Statement were characterised by a series of leaks and early announcements, as the Government’s first formal budget update since the EU referendum it was still much anticipated in Westminster and beyond. As well as giving an update on the effect of Brexit on the country’s economic forecasts, many were hoping the Chancellor’s statement would give an indication as to the Government’s strategy post-Brexit.
When appointed to the role, Hammond suggested he would “reset economic policy”: many in the environmental sector may have been hoping this would be accompanied by some clarity regarding support for the environment and the green economy. In reality, this statement offers little of substance on such issues, with climate change not even receiving a mention in the Chancellor’s speech. The statement focused heavily on productivity and infrastructure, and this meant some better news for science and research funding. Here I pull out some of the key points (and omissions!) from the statement and reflect on what they might mean for the environment and science sectors.
Despite the major achievements of the last year, including the UK’s recent ratification of the Paris Agreement, climate change was not mentioned in either the Chancellor’s speech or in the statement itself.
It was announced, however, that the Carbon Price Floor (CPF) (the UK’s carbon tax: a top-up tax on industrial emissions, designed to supplement inadequate prices in the EU emissions trading scheme) would be maintained, and the cap of £18/t CO2 announced by George Osborne would be maintained to 2020. In advance of the statement, it was suggested that the CPF, which is widely credited with accelerating the decline of coal as part of the UK energy mix, may be scrapped, so this continuing commitment is welcome. When the scheme was designed, the carbon price was intended to rise gradually to £74/t CO2 by 2030, yet the Chancellor delayed decisions regarding its future trajectory.
Decisions were also delayed on the Levy Control Framework, which is effectively a cap on subsidies for low-carbon energy designed to keep down consumer energy bills. The future of the framework beyond 2020-21 is unclear, and the Chancellor stated that this will be clarified in the 2017 Budget.
Low emission vehicles
One of the major announcements of this statement was the creation of a new National Productivity Investment Fund (NPIF). This fund will provide £23 billion of investment in projects considered critical for improving productivity over the next four years.
As part of this fund, the Chancellor announced that a very welcome £390 million will be invested to support ultra-low emission vehicles (ULEVs), renewable fuels, and connected and autonomous vehicles by 2020-21. This includes £80 million for ULEV charging infrastructure, £150 million to support the development and introduction of low emission buses and taxis, and £20 million for the development of alternative aviation and HGV fuels. It was also announced that until the end of March 2019, the Government will also offer 100% first-year allowances to companies investing in electric vehicle charge-points. Given the urgent need to address poor air quality in our cities whilst meeting our international climate change obligations, this is an important investment, and should be welcomed.
However, in what could be considered a contradictory move, the Chancellor has also maintained the freeze on fuel duty or the seventh year in a row. Many commentators are suggesting it has become politically impossible for a Chancellor to raise fuel duty, due to public sensitivity to increasing prices at the pumps.
One of the few directly environmentally-relevant announcements of the statement was a further investment of £170 million in flood defence and resilience. Such a move was perhaps inevitable after the impacts of flooding around the UK in the last year, and will be welcomed by campaigners. This investment will include £100 million and £50 million to improve the resilience of the road network and railways respectively, and £20 million to fund new flood defence schemes. However, the ENDS Report notes that it remains unclear whether spending to protect existing defences will be maintained, so there are still questions to answer here.
No announcements were made regarding the natural environment or land management policy in the statement. A clear signal that investment in schemes designed to improve flood resilience through catchment management, alongside such infrastructure investments, would have been a major improvement. Hopefully this discussion can be continued in other forums, such as consultations on Defra’s upcoming 25 year plan for the environment.
Science and research
Another major strand of investment planned under the NPIF is in research and development (R&D), which the Government recognises as a key driver of economic growth, and will form an important part of its Industrial Strategy. As such, it is planned that £4.7 billion will be invested in R&D through the fund by 2020-21. In a speech at the CBI on Monday the Prime Minister announced £2 billion of new funding for R&D, which was met with a cautious welcome from the science community, anxious this number may not be all it seems. However, with the detail of the Autumn Statement now available, we can see that the Government has set out a plan to increase spending year-on-year, delivering the promised £2 billion increase on existing spending (which amounts to approximately 20%) by 2020.
This funding will be split into two major streams:
- An Industrial Strategy Challenge Fund, with a cross-disciplinary focus, designed to bring businesses and academics together to tackle specific technological challenges; and
- A more general fund for innovation, applied science and research, which will be managed by UK Research and Innovation once it is established.
This announcement is a major and unexpected success for the UK science sector, and although details as to exactly how the fund will be distributed are yet to be confirmed, leading commentators recognise that this is a truly exciting development. This announcement will go a long way to increasing the hopes of those nervous about the planned changes to research funding structures in the UK, and represent a positive indication that this Government understands the importance of adequate science funding for our economy.
So, as the dust settles on Philip Hammond’s first and last Autumn Statement, a mixed picture emerges for environmental scientists. For those concerned with research funding, there is much to cheer. In terms of a signal of the Government’s commitment to decarbonisation there are small nuggets of hope, but the general picture shows there is a great deal more to be done. With a few exceptions, other environmental issues are significant by their absence.
The environmental sector must now take heart from the successes of the science and research community, and redouble our efforts making the case for a strong and integrated long-term plan for the environment. If we are to succeed in tackling the challenges of transitioning to a sustainable society, particularly in the face of Brexit, it is more important than ever that we ensure this plan is ambitious and rooted in legislation, and that government dedicates sufficient resources, at both local and national levels, to its coordination and implementation