EE#12 Autumn Statement, what just happened

So many pages

It’s autumn statement day, and a thousand takes are being written that it was a ‘missed opportunity to fund my thing’. An Autumn Statement under this government was never going to be a big net zero-intervention even if the front page was green. For a start, the Government needs to maintain their new political dividing line, but it does seem like the tone has shifted. Hunt’s critique was not that net zero industries need to go slower, the opposite they’re a big focus of his growth argument, but that how Labour would go about supporting them is irresponsible and erratic. Borrowing for capital investment is only bad when the left does it. 

Today was much more a pitch of a return to Tory economic competence after the disaster of the mini-budget last year. If anything a number of the moves made Labour’s green plans easier but solidified their own dividing line on the role of the state in the transition. 

Here’s a quick review of what was announced on investment, planning, and energy grid. 

Schrodiner’’s Capital

The Advanced Manufacturing Plan in-theory provides significant new funding to strategic sectors, nearly all of which are in some way related to the transition - zero-carbon aircraft, zero-emissions vehicles, and clean energy manufacturing. This was heavily trailed, though for some reason the press release came out at 6 pm on a Friday evening and then shockingly received no coverage. In the deluge of documents on Autumn Statement Day, HMT did not include either the Advanced Manufacturing Plan or the Battery Strategy. Given the capital investment is post 2025, it isn’t in the policy costings and OBR also hasn’t included its cost or impact. For now, this remains Schrodiner’’s capital, we won’t know it it’s alive until it is (in theory next week). 

If it is alive when we open the box, then it must surely go to predominantly research activities. £960m for CCUS, electricity networks, hydrogen, Nuclear (!!) and offshore wind runs out quickly. Because fiscal rules have pushed the money into 2025, we are also somewhat missing the point. The IRA and EU equivalent came out last year. The UK’s attempt to compete will come three years later. 

I was interested in a tweak to UKIB to include financing for critical minerals supply chain development. This is helpful, but shows how little independence the UKIB has, and how open it is to being shaped by political priorities.

Full expensing has also been made permanent. Cool, the UK’s principal economic challenge is under-investment, removing the time-limited horizon of the super-deduction should give more confidence to private capital. Two issues though. The first is that there remain no guardrails for the type of capital this rewards, no matter how (un)productive. If I cared about growth I’d be more stringent about what government finance can support - as I’ve written before green investments have much higher economic multipliers than non. The second is political. Jeremy Hunt lambasted Labour’s £28bn as irresponsible borrowing and spending, how is a subsidy of full expensing any different? If anything given its intention is to stimulate private investment, like the Inflation Reduction Act, you don’t know what its total uptake will be.

Smuggled alongside was also an investment exemption for electricity generators (mostly wind and solar) from the electricity generator levy. This is great and brings equality to the oil and gas windfall tax which had its own. Given capital costs are the biggest challenge for the sector currently this makes things (marginally) better. 

A Planning Plan Baldrick. 

The government has stolen a march on things that Labour had announced at its conference, including increasing competition on the grid and maybe helping a bit more with supply chains. Much of this was in my ace colleague Amy Norman’s incredibly comprehensive report on grid reform. Obviously without Labour’s promise that the state would come and play in those markets. This actually makes things easier for Labour as they’re now building on government rather than going against the grain, whilst also maintaining a dividing line on the role of the state in energy transmission. This is part of a broader response to Nick Winser’s review of electricity transmission. The response is long and detailed and sure more will shake out over the next week.

More low-carbon projects are going to qualify for the Nationally Strategic Infrastructure Process. For solar, this is about project size, solar for example currently only qualifies above 50MW. This should speed up planning for those in a different part of the system - but also means new/different paperwork for companies previously at a different threshold. 

Heat pumps no longer have to be a metre away from properties, if the consultation goes the right way. EV charging could also make it into the National Planning Policy Framework. 

We have priority boarding for planning. If Local Authorities can process planning applications faster they can reclaim the costs. Election Energy is all for anything that speeds up planning, but cash incentives don’t overcome a lack of resource to do planning in the first place. If LA’s fail to hit the timeline and fees are refunded that will only make the problem worse. 

Benefits (to my) street

Also, there is increased community benefit. Government pre-briefed that individuals could get up to £10,000 for living near pylons (for reference this is based on a study which suggested this is the potential fall in house prices from transmission), though I can’t square that amount with the plan to do it through electricity bills. We’ll get more next year, including how this squares with promised community-level funds.

Please hold, we’ll connect you soon

The connections plan trailed by Ofgem is out. Crucially, this applies not just to those joining the queue to connect to the national grid but to those already in it, allowing stalled projects to be kicked out of line. We’re moving away from first-come first-served to a focus on readiness with more milestones and higher entry bars.