What will Jeremy Hunt’s budget mean for the planet? Left: Flickr / HM treasury, Right: Canva
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The UK’s Spring Budget ignores the threat of climate breakdown, campaigners and experts have said – and fails to close “ridiculous” tax loopholes for fossil fuel polluters.
Chancellor Jeremy Hunt has delivered his Spring Budget, one of the government’s last opportunities to set out its economic stall before the next general election.
His cut to national insurance has dominated the headlines. But the chancellor’s policy package also has environmental implications, too.
Hunt announced two new nuclear sites, an extension on the “windfall” tax levied on the profits of energy firms, and an increase to air passenger duty on business class flights.
Yet campaigners have slammed the budget as “disappointing,” “irresponsible” and as a “missed opportunity.”
Let’s dig into some of the detail.
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What does the budget mean for the planet?
The windfall tax has been extended
The government has extended the windfall tax on the profits of North Sea oil and gas companies by a year, a policy which is expected to raise an expected £1.5bn.
Mike Childs, head of policy at Friends of the Earth, welcomed the move – but stressed its severe limitations.
“The chancellor is right to continue the energy windfall tax – but he should have extended it for more than a year and closed the ridiculous loopholes that allow companies to offset their tax by drilling for more costly and polluting fossil fuels,” he said.
Oil and gas companies can reduce their tax bill by up to 91% by investing in energy infrastructure.
According to the New Economics Foundation, oil and gas extractors could receive up to £18.1bn in tax relief between 2023 and 2026. That’s an eyewatering increase of £10.5bn, or 136%, from the £7.6bn they were expected to receive before the energy crisis.
Global Justice Now called for a permanent tax to fund the clean energy transition.
“Once again this government has failed to close the loopholes in its windfall tax which hand billions back to the oil and gas industry to keep on drilling,” said Izzie McIntosh, climate campaign manager.
“Instead of piecemeal climate policies here and there, we need a government truly ready to address the climate crisis at its root. That means introducing a permanent polluters’ tax to fund a fair transition to clean energy and phasing out fossil fuel production altogether – these are measures which could truly ensure economic and environmental security in the long term.”
Molly Scott Cato, a professor of Green Economics at the University of Roehampton and a former Green party Member of the European Parliament, derided the chancellor’s call for investment in the north sea as “utterly irresponsible.”
“I weep for young people and the planet we are bequeathing to them,” she posted.
Investment in Nuclear power
Hunt confirmed that the government has paid £160m to buy two nuclear projects from Japanese technology giant Hitachi; one in Wylfa, North Wales and the other in Oldbury, Gloucestershire.
The technology giant had intended to start construction of the projects back in 2014 but abandoned its plans in 2020
“We want nuclear to provide up to 25 per cent of UK electricity by 2050 and I want the UK to lead the global race in developing cutting edge nuclear technologies,” Hunt said.
However, nuclear is controversial in environmental circles. Unlike fossil fuels, it doesn’t produce huge quantities of CO2 – but the radioactive waste it produces is extremely hard to dispose of.
Existing renewable technology is a far safer bet, said Leo Murray, co-director of climate charity Possible, Leo Murray.
“It’s disappointing that the government is still chasing after energy technology unicorns, by funnelling taxpayers’ money into unproven, expensive and potentially undeliverable nuclear fusion and carbon capture and storage,” he said.
“Even if these technologies do eventually become feasible, there is no prospect of them contributing to our near-term climate goals, which we are on course to miss, or reducing energy bills for households.
“If the government wanted to actually get on with delivering clean, cheap and secure energy, they would end the block on new onshore wind in England.”
The government will allocate up to £120m additional funding to the green industries growth accelerator to build supply chains for green technology – but this will also include controversial carbon capture tech.
Freezing fuel duty
The ‘temporary’ 5p cut in fuel duty has been extended, with the levy frozen at its current levels for another year.
But analysis from the Energy and Climate Intelligence Unit (ECIU) has found that the petrol car drivers are still paying hundreds of pounds more to run their vehicles than those driving electric cars.
“If the Chancellor really wants to help the UK’s drivers save money, helping drivers make the move to EVs will make a much bigger difference,” said Colin Walker, Transport Analyst at the Energy and Climate Intelligence Unit.
“The policies to achieve this, and called for by UK motoring groups, include bringing VAT on public charging in line with VAT on private charging at home by reducing it from 20% to 5%, or temporarily halving VAT on sales of new EVs.”
Childs said that investment in better public transport would not only “boost the economy” but would “help the UK play its part in the fight against the growing climate crisis.”
Increase in air passenger duty
Airline passengers travelling in premium cabins will be hit by a “one off adjustment” to the level of air passenger duty – essentially, a tax hike.
APD for passengers in premium cabins on departures from UK airports costs between £13 and £200, depending on the distance of the flight. Treasury documents do not specify how much this will increase by, but claim it will raise an extra £110m next year (2025/26).
Possible’s Leo Murray said that “tinkering” with the premium seat tax “doesn’t go far enough” to mitigate the huge climate impact of flying.
“This paltry increase does not match up to the emissions caused by aviation and from business passengers,” he said. “We need action to tackle the frequent flying by a small group of wealthy people which causes most of the harm from aviation.
Murray called for a frequent flyer levy, pointing out that just 15% of people in the UK take 70% of all flights.
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