2023 Autumn Statement: What’s new for energy and the built environment?

Today in the House of Commons, Chancellor Jeremy Hunt unveiled the government’s tax and spending plans in what he billed as an ‘Autumn Statement for growth’. As expected, the Chancellor announced a series of business and personal tax cuts, as well as a set of more optimistic forecasts for the economy. Here are some of the 110 measures announced that affect the energy, clean technology and built environment sectors.

Energy: plans to accelerate a low carbon grid

The statement announced measures to address barriers to low carbon energy investment, such as the UK’s outdated planning system and lengthy delays to connect to the electricity grid.

They included:

• Extending the critical national priority designation for nationally significant low-carbon energy projects.

• A pledge to cut waiting times for grid connections, including freeing up over 100GW of capacity so that new projects can connect sooner. The aim is to reduce connection delays from five years to no more than six months.

• An Action Plan to halve the time to build new grid infrastructure to seven years.

• Amending the National Planning Policy Framework to ensure the planning system prioritises the rollout of EV chargepoints, including EV charging hubs.

• Reducing restrictions on heat pumps.We can expect a consultation on introducing new permitted development rights to end the blanket restriction on heat pumps one metre from a property boundary in England. 

Targeted energy efficiency support for businesses 

The Chancellor also announced a newly reformed, six-year Climate Change Agreement scheme, the details of which are being consulted on. It will start in 2025, once the current scheme ends, and provide around £300 million a year to businesses in tax relief in exchange for meeting energy efficiency targets. 

Full expensing will also be made permanent, allowing businesses to write off the full cost of qualifying plant and machinery investment, including energy efficient equipment. This applies across the economy, including to the UK’s capital-intensive green industries such as solar and offshore wind, which will also benefit from a new investment exemption from the Electricity Generator Levy.

Targeted support for green industries

The Chancellor also reiterated an announcement made late last week (18^th November) – to allocate £4.5 billion to unlock investment in strategic manufacturing sectors – including auto, aerospace and clean energy. This includes a £960 million Green Industries Growth Accelerator (GIGA) – which will support investments in manufacturing capabilities for the clean energy sectors where the government says the UK can gain the clearest strengths: Carbon Capture Utilisation and Storage (CCUS), hydrogen, offshore wind, electricity networks, and nuclear.

The government also announced the next set of Investment Zones, in Greater Manchester, West Midlands and East Midlands. The East Midlands Investment Zone will have a focus on green industries and advanced manufacturing, and is expected by local partners to help to leverage £383 million in private investment and help to create 4,200 jobs in the region over the next 10 years.

Accelerating offshore wind

The government will bring forward legislation to provide the Crown Estate with borrowing and wider investment powers as soon as parliamentary time allows, which will help to unlock a further 20-30GW of new offshore wind seabed rights by 2030.

Built environment: A focus on planning reforms to speed up decision-making

To cut the time it takes for planning applications to be granted for businesses, the Chancellor said he will allow local authorities to recover the full costs of major business planning applications if they meet guaranteed faster timelines. But if they fail, the business will be refunded in full and have their planning application processed free of charge in what the chancellor described as a ‘prompt service or your money back’. The Chancellor said £32m will be invested in planning and delivering new homes to “bust the planning backlog”.

Other key announcements affecting the sector include:

• £110m to deliver high-quality nutrient mitigation schemes to unlock 40,000 new homes.
• £50m over two years to pilot ways to increase the number of apprentices in “engineering and other key growth sectors”. 
• Funding to develop “housing quarters” in Cambridge, London and Leeds.
• £450m to the local authority housing fund to deliver 2,400 new homes.
• A new permitted development right to allow any house to be converted into two flats.
• £50m for “high quality regeneration projects”. From April 2024, any company bidding for large government contracts should demonstrate they pay their invoices within an average of 55 days to be reduced to 30 days.
• People living closest to new pylons and electricity substations will receive up to £10,000 off their bills over 10 years.

Wider support for business: A boost in investment for AI and new tax relief for R&D

• The Government promised a further £500m will be invested over the next two years to fund further innovation centres to help make Britain what Hunt termed “an AI powerhouse”

• A “new, simplified” tax relief for research and development will combine the existing R&D Expenditure Credit and SME schemes. Through that merged scheme, the rate at which loss-making companies are taxed will be cut from 25% to 19%.

• The 75% discount on business rates – the tax paid on non-domestic properties – up to £110,000 for firms in retail, hospitality and leisure will be extended for another year. Other announcement to support specific sectors include:

• £50m over two years to pilot ways to increase the number of apprentices in “engineering and other key growth sectors”. 
• £520m for life sciences.
• Financial incentives for investment zones and tax relief for freeports from five years to 10 years.

In summary, the Chancellor said: “The 110 measures I take today help close that gap by boosting business investment by £20bn a year. They do not involve borrowing more and ramping up debt as some advocate. Instead they unlock investment with supply-side reforms.”