In a budget that is so close to an election there was never going to be pain inflicted that would upset the electorate and so measures required to compel anyone to spend money on energy saving was not going to feature in the Chancellor’s speech. On the contrary, with Labour repeating their pledge to freeze energy prices the likelihood was that taxes on energy would be reduced – and with it the inevitable consequence that payback times on energy saving measures would become longer.
This is indeed what happened where the Chancellor quoted a figure for reduction of national energy costs of £7bn through a £1bn “special protection” aimed mainly at manufacturers with high energy intensity operations, steel mills, paper producers and chemical manufacturers. This package is intended to “protect… from the rising costs of the Renewable Obligation and Feed-in-Tariffs”.
A freezing of the Carbon Price Floor does also have a small benefit to householders – estimated at £15 per year.
One surprise however was a concession given to CHP which now has an exemption from the Carbon Price Floor for electricity generated. It is aimed mainly at manufacturers using this technology but presumably will benefit other district schemes as well.
The Chancellor indicated that there would not be a reduction in renewable energy investment but since so much of that is driven by private investor money it remains to be seen how they will react to the plain intent to begin to offset the differential between UK energy prices and those in the USA. Mr Osborne noted industrial energy costs were half the price in the USA compared to UK.
Elsewhere the statements regarding the efforts to increase house building were largely a restatement of previous announcements such as the proposed new garden city at Ebbsfleet and additional housing in Barking and Brent Cross. What was intriguing was a proposal to give individuals a new “Right to Build” – backed with £150m of finance. The details of that will be interesting indeed as previous ministers with construction responsibilities have been keen to increase the volume of self-build homes.
Overall the budget did have a feel of being “Northern friendly” with reference to earlier consideration of HS2 construction beyond its current plan, extension of enterprise zone tax breaks for a further three years and £270m to guarantee funding for the Mersey Gateway bridge.
Certainly the construction sector will welcome efforts to move the centre of effort further out from the London basin so that resources locked up in people, land and facilities can be fully exploited without the additional costs of working in the hothouse of the South but a budget designed for green development? I don’t think so, that will have to wait until unpalatable policies can be applied with four years to go before a vote!
Andrew Eastwell, BSRIA Chief Executive (September 1998 - April 2014)