2024 Spring Budget: Key takeaways for energy, built environment, and technology

In a highly anticipated announcement in the House of Commons, Chancellor Jeremy Hunt unveiled the government’s plans for the Spring 2024 Budget. This year’s budget includes updates to the next set of Investment Zones as well as funding to a handful of clean energy measures. But, are they really up to par? Here’s a detailed look at the key highlights and measures proposed.

Energy announcements for the UK

Windfall tax extension: Building upon previous initiatives, the government has decided to extend the Energy Profits Levy (EPL) by an additional year until March 2029, aiming to raise £1.5 billion. The levy was originally introduced to ensure equitable taxation for oil and gas producers within the UK. To ensure that the EPL is temporary, legislation in the Spring Finance Bill will render the levy invalid once prices return to normal.

Grid Connection Reforms: Grid access has long been hampering renewables growth in the UK, from stalled projects to massive queues for connecting to the grid. The Spring Budget announced a few new measures to accelerate reform, including the establishment of a task force to explore Alternative Dispute Resolution mechanisms; addressing compensation disputes between landowners and electricity network operators.

Later this month, the Electricity System Operator is publishing the transitional Centralised Strategic Network Plan (expected to stimulate up to £60 billion additional investment in the GB network) and in autumn we’re expecting to hear more on the implementation of a new stringent connections process from January 2025 so that projects are only offered a specific connection date when they are ready to progress. 

The government says it is also working with the Electricity System Operator to outline further reforms by summer 2024, raising barriers to entering and remaining in the queue.

National Business Energy Advice Service: A pilot programme called the Business Energy Advice Service is currently running in the West Midlands. It provides SMEs with free energy audits and then gives them the chance to apply for up to £100,000 of match funding towards the cost of all or some of the recommended measures. The Budget paper stated that the government is carefully reviewing the results of a pilot programme with the goal of extending help across the country, even though there was no update provided on this.

Largest ever Contracts for Difference budget: For the most recent round of Contracts for Difference financing (AR 6), the government has put aside more than £1 billion – its largest ever budget. The document identifies three new rule adjustments now that the full parameters have been released. The official government website has the whole list of modifications.

Manufacturing and Innovation

Advanced Manufacturing Plan: With a commitment to bolstering the UK’s manufacturing sector, the government reiterated its pledge to invest over £4.5 billion in strategic manufacturing sectors. Key allocations include over £2 billion for the automotive industry and £975 million for aerospace, available for five years starting from 2025.

Green Industries Growth Accelerator (GIGA): In continuation of efforts to foster green industries, an additional £120 million is allocated for GIGA. This funding aims to support the expansion of low-carbon manufacturing supply chains across the UK, with significant investments directed towards offshore wind, electricity networks, Carbon Capture Utilisation and Storage (CCUS), and hydrogen.

Research and Innovation Organization (RIO) Fund: A £14 million allocation is made for infrastructure used by public sector research and innovation organizations, building upon previous investments to foster research and development activities.

Built Environment 

The construction industry was not directly mentioned in the chancellor’s speech, and the Budget contained little new funding or reform for planning or housebuilding. However, announcements in the budget that could have a bearing on the sector include:

• An extension to the fuel-duty freeze
• Increasing the VAT registration threshold from £85,000 to £90,000 from the start of April
• Access to finance for small and medium-sized businesses through a Recovery Loan Scheme; and full expensing to leased assets – allowing companies to claim capital allowances for investment in more plant.
• Lowering the higher rate of property gains tax from 28 to 24 per cent and scrapping tax relief on holiday homes.
• £650m of funding from AstraZeneca for new schemes at Cambridge’s Biomedical Campus and at its manufacturing facility in Merseyside.

A 98-page HM Treasury document accompanying the Budget meanwhile unveiled new details about plans for a mega-development around the HS2 Euston station, including £4m for the Euston Housing Delivery Group to support plans to deliver up to 10,000 new homes around the HS2 terminus. HM Treasury documents also detailed:

• A £20m investment in social finance to build up to 3,000 community-led homes
• £240m to build nearly 8,000 homes in east London – at Barking Riverside and Canary Wharf, alongside a new life sciences hub. 
• Approval for the next section of East West Rail, accelerating work to allow services from Oxford to Bedford to run by the end of the decade.
• £400m in new investment to extend the Long-Term Plan for Towns to 20 more places.
• Confirmation that a new development corporation in Cambridge will receive funding from the next spending review, plus £10.2 million to support the Cambridge Biomedical Campus.
• A second round of the Local Nutrient Mitigation Fund, designed to help restart schemes totalling 30,000 homes stalled by the nutrient neutrality crisis.
• £3m to match industry funding for a programme to attract more planners to take up roles in local authorities.
• A commitment to fund the extension of the National Film and Television School in
• New funding was also announced for initial investment in 15 schools for children with special educational needs (worth £105m)
• Maintenance work at the National Theatre (£26m)
• A memorial for Muslim soldiers (£1m)

The Government has also pledged to take steps towards “removing barriers to investment within the infrastructure and commercial planning system”.

A change to Environmental, Social, and Governance Ratings

Providers of Environmental, Social and Governance ratings will now be regulated by the government to users within the UK. ESG ratings providers will be brought into the regulatory perimeter of the Financial Conduct Authority. Previously, the ESG sector was not directly regulated in Britain.

Investment Zones Programme:

The government today announced further details on the Investment Zones programme that was launched at Spring Budget 2023. The programmed gives areas a £160 million envelope to catalyse local growth and investment. Further to announcing details for the West Yorkshire Investment Zone on 1 March, the government has announced details of how Investment Zones in Greater Manchester, Liverpool City Region, North East of England, South Yorkshire, and West Midlands will use the funding. You can read about it in detail here.  

Investment Opportunity Fund: To stimulate private sector investment in high-potential clusters across the UK, the government introduces the Investment Opportunity Fund, aiming to facilitate economic growth and innovation.

Extension of the Recovery Loan Scheme (RLS): Renamed as the Growth Guarantee Scheme, the Recovery Loan Scheme is extended until the end of March 2026. This scheme offers a 70% government guarantee on loans to SMEs, providing crucial financial support for business growth and resilience.

In the meantime, our Content Coms team will be keeping tabs on the implementation of the Spring Budget actions. Keep an eye on our blog for more updates. Got a question? Get in touch with our industry-leading energy and built environment specialists.