This afternoon, the Chancellor presented the Government’s Spring Budget to Parliament. The Spring Budget is an update on the Government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility and sets out the Government’s taxation and spending plans. This was the last Budget to take place in the Spring as Budgets will now be delivered annually in the autumn. The full Budget document can be read here.
The update was relatively light for the energy sector and largely acted to signal forthcoming announcements. Key points to note were:
- Government confirms it will shortly publish a green paper to “examine markets that are not working efficiently or fairly” but does not clarify the markets of focus and whether this will extend to energy markets.
It does confirm the Green Paper will seek to allow consumer enforcement bodies to ask the courts to order civil fines against companies that break consumer law and to make terms and conditions clearer.
- The UK Government confirms its support for carbon pricing into the 2020s and will set out further details in the Autumn Budget 2017
The government confirmed it remains committed to carbon pricing to help decarbonise the power sector. Currently, UK prices are determined by the EUETS and Carbon Price Support. Starting in 2021-22, the government will target a total carbon price and set the specific tax rate at a later date, giving businesses greater clarity on the total price they will pay. Further details on carbon prices for the 2020s will be set out at Autumn Budget 2017.
- The Levy Control Framework will be replaced by a new set of controls to be set out later in 2017. The government recognises the need to limit costs to businesses and households as the UK decarbonises its energy supplies. The existing LCF has helped to control the costs of low carbon subsidies in recent years, and will be replaced by a new set of controls. These will be set out later in the year.
- Funding to support the development of ‘disruptive technologies’, including batteries to power next generation of EVs. An initial investment of £270 million in 2017-18 will kick-start the development of disruptive technologies that have the potential to transform the UK economy. Following engagement with experts in academia and industry, the Budget announces that the first wave of challenges funded from the Industrial Strategy Challenge Fund (ISCF) will include the following: i) leading the world in the development, design and manufacture of batteries that will power the next generation of electric vehicles, helping to tackle air pollution ii) developing cutting-edge artificial intelligence and robotics systems that will operate in extreme and hazardous environments, including off-shore energy.