The climate crisis, the UK’s target of reaching net zero greenhouse gas emissions and the green economy received not a single mention in Rachel Reeves’s spring statement on Wednesday.
To green experts, this absence came almost as a relief, given that the chancellor was taking an axe to so many other aspects of public spending. There are still no guarantees that green investment will not be quietly cut in the near future.
But at a time when the UK’s green sectors are growing at three times the rate of the rest of the economy, according to the CBI, ignoring climate and environment policy means missing vital opportunities.
Ed Matthew, UK programme director at the E3G thinktank, said: “The chancellor has left a huge open goal by neglecting the clean economy as the primary driver for growth in the UK. While the broader economy slumped, the clean economy boomed, growing by 10% last year, creating £83bn of added value.
“If the government is serious about growth, it must stop tinkering at the edges and ramp up capital investment into the clean economy – the best chance we have for economic recovery.”
A host of measures – including some that Labour espoused in opposition, but which are now on the back-burner or under threat – could deliver cost savings for households and businesses, economic opportunities, and revenue for the Treasury.
Insulating homes lowers bills, cuts waste, improves health and creates jobs. The government pledged £13.2bn by 2030 for a “warm homes plan” in its manifesto, but Westminster insiders suggest this spending could be under threat due to the chancellor’s “non-negotiable” fiscal rules.
Owing to the way the UK’s electricity market has worked since privatisation, electricity bills are set by the marginal wholesale price of gas, which is often the most expensive energy option on the grid.
This could be changed, and shifting green levies from bills to general taxation, reforming the market and updating infrastructure would also make electricity cheaper, encourage the switch to electric vehicles and low-carbon power and allow for greater efficiency.
Chris Glover, director of total utilities management at the engineering firm Buro Happold, said: “We currently pay around £1bn per annum to curtail renewable energy generation when the grid cannot handle the power.
“This eye-watering amount of money is simply passed on to consumers, who end up paying for both the curtailed renewable energy and the gas that replaces it.”
Fossil fuel dependence has been a key factor in high inflation, according to the Treasury. But the £8.3bn promised for Great British Energy to spur the development of more renewable generation, though unmentioned by Reeves, is in question.
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The rural economy is also faltering: a survey this month by the National Farmers’ Union found confidence among farmers in England and Wales at an all-time low. The budget for the sustainable farming initiative, which rewards farmers for taking measures that improve the environment, such as helping to clean the air and water, and protect soils, may be cut in June.
Failing to spend sufficiently on protecting the UK against the climate crisis could also prove a costly mistake, as the impacts of extreme weather are expected to worsen.
Every £1 spent on flood resilience prevents about £8 of damage, of which £3 is a direct benefit to the government; a report last year from the Green Finance Institute found the degradation of the UK’s natural environment was slowing economic growth and could lead to an estimated 6-12% reduction in the UK’s economy.
But those impacts are not immediate, while the fiscal rules are defined by expediency.
Simon McWhirter, deputy chief executive at the UK Green Building Council, said: “The spring statement continues this government’s short-term thinking, when what we need are robust spending plans to drive long-term prosperity.”
