The Spring budget primarily focused on a set of tax cuts and highlighted progress in reducing inflation and achieving stronger-than-expected growth. However, it lacked significant measures to excite cleantech investors and innovators, with little mention of climate change or new initiatives to boost green investment.
Despite this, several noteworthy measures were unveiled:
- Reinstatement of Eligibility Criteria for Investors: Earlier this year, the Chancellor raised the income threshold used to define high net-worth individuals from £100k to £170k, which threatened to dampen activity of angel investors. The budget announced that the government will legislate to reinstate the previous eligibility criteria to qualify as a high net worth or sophisticated investor and will also carry out further work to review the scope of the exemptions.
- Pension reforms: Pension funds will be required to publicly disclose how much they invest in UK businesses compared to those overseas. Government also confirmed the winners of the Long-Term Investment for Technology and Science (LIFTS) competition as Schroders and Intermediate Capital Group (ICG), supported by pensions capital from Phoenix Group. Government also announced the launch of a UK ISA and British Savings Bonds.
- PISCES: The government is consulting on the Private Intermittent Securities and Capital Exchange System (PISCES), a new innovative market that will allow private companies to scale and grow and will boost the pipeline of future IPOs in the UK.
- Carbon Border Adjustment Mechanism: Confirmed for implementation from January 2027, this mechanism aims to ensure fair competition by applying to relevant goods imported in various sectors.
- Planning: the government published the consultation on a new accelerated planning service for major commercial applications; a response to the consultation on operational reforms to the Nationally Significant Infrastructure Project regime; and the updated National Networks National Policy Statement.
- The government also announced a pilot program utilising AI solutions to expedite local planning processes, aiming to reduce plan development times from seven years to 30 months.
- The Department for Energy Security and Net Zero will also consult to introduce full cost recovery for planning casework it undertakes under the Electricity Act 1989 and Planning Act 2008, helping to boost capacity and ensure timely decisions as the volume of applications increase.
- Government also committed to publishing new community benefits guidance by June 2024 and developing a new public register of community benefit packages.
- GIGA: A further £120 million for the Green Industries Growth Accelerator (GIGA) has been allocated, to support expansion of low carbon manufacturing supply chains across the UK.
- Renewable Energy and Nuclear Projects: The full parameters for the Contracts for Difference Allocation Round 6 (AR6), including setting the largest ever budget for a single round of over £1 billion were published. Government also confirmed the next stage of the SMR process and announced an agreement on a £160 million deal with Hitachi to purchase the Wylfa site in Ynys Môn and the Oldbury-on-Severn site in South Gloucestershire, though no decisions have been taken on projects.
- Extension of Energy Profits Levy: Gas prices are forecast to remain abnormally high until at least 2028-29. The government is therefore extending the Energy Profits Levy by an additional year to 2028-29. The government is also bringing forward legislation to put beyond doubt that the Energy Profits Levy will end if oil and gas prices drop below the levels set by the Energy Security Investment Mechanism before then.
- Air Passenger Duty and Duty on Vaping: The government is making a one-off adjustment to rates of Air Passenger Duty (APD) on non-economy passengers to account for high inflation in recent years and help to maintain the value of APD in real terms. Government is also adding a duty to vaping products.
- Support for SMEs: The government will increase the VAT registration threshold to £90,000 from 1 April 2024 and is extending the Recovery Loan Scheme to support SMEs to access finance, renaming it the “Growth Guarantee Scheme”.
- R&D Tax Credits: To improve the functioning of the R&D tax reliefs system, HMRC will establish an expert advisory panel to support the administration of R&D reliefs.
- Extension to full expensing: The government will seek to extend full expensing to assets for leasing when fiscal conditions allow and will publish draft legislation shortly.
- ESO: The electricity systems operator will shortly publish the transitional Centralised Strategic Network Plan which is expected to stimulate up to £60 billion additional investment in the GB network. They will also Implement a new stringent connections process from January 2025 so that projects are only offered a specific connection date when they are ready to progress.
- ESG: The government will regulate providers of Environmental, Social and Governance (ESG) ratings to users within the UK. ESG ratings providers will be brought into the regulatory perimeter of the Financial Conduct Authority.
- Agriculture: £427 million for agriculture innovation.
- East – West rail: The government is giving the green light to the next section of East West Rail, to allow services from Oxford to Bedford to run by the end of the decade.
Numbers to note from the Budget
- GDP grew in 2023, albeit modestly by 0.1%, and unemployment has remained low by historic standards at 3.8% in Q4 2023.
- Inflation has more than halved, falling from its peak of 11.1% to 4.0%. The Office for Budget Responsibility (OBR) forecasts that inflation will return to the 2% target next quarter, a year earlier than forecast in November 2023.
- Ofgem’s energy price cap will be 39% above its pre-invasion level in April 2024.
- The OBR forecasts the economy to grow by 0.8% in 2024.
- Since Autumn Statement 2023, government reforms to the grid system have accelerated offered connection dates for projects totalling 40GW, equivalent to £40 billion of investment.
