Today's Budget significantly improves the UK's green investment climate, but it was still a long way short of the comprehensive net zero transition strategy that is so desperately needed
I was reminded the other day of George Monbiot's response to the dramatic and historic finalisation of the Paris Agreement in late 2015. "By comparison to what it could have been, it's a miracle," the acclaimed environmental campaigner wrote. "By comparison to what it should have been, it's a disaster."
It's a line that could easily be applied to the green component of Budgets over the years, but it feels particularly apposite this afternoon following Rishi Sunak's strangely underwhelming Budget speech. Long gone was the talk of Rooseveltian New Deals that dominated the government's rhetoric last summer, to be replaced by a disorientating mix of Gordon Brown and George Osborne with an Instagram account: 'We'll deliver a state-led green recovery, but steady now, don't forget the deficit'.
Of course, Sunak is hardly unique in seeking to triangulate his way out of the climate crisis with a mix of fuel duty freezes and green infrastructure investment. Pretty much every Chancellor over the past 15 years has done it. As the Press Association's Emily Beament observed on Twitter this afternoon, "this has become something of an evergreen tweet of mine... but at some point a Budget or Spending Review needs to be green focused, not just green tinged".
But today felt particularly disappointing given the sharp contrast between the patchwork of welcome but largely underpowered green policy announcements and Sunak's rhetorical recognition that the combination of the covid and climate crisis presents a unique historic moment when a full spectrum green recovery strategy is utterly essential. "It's not enough to have some general desire to grow the economy," Sunak declared. "We need a real commitment to green growth." But he didn't quite pass his own test.
There were, thankfully, a lot of welcome new developments that will provide a tangible boost to the green economy and the net zero transition over the coming years. It is bizarre that the same government that less than four years ago sold off a Green Investment Bank with a national infrastructure remit is to launch a National Infrastructure Bank with a green investment remit, but the promise the bank will be able to borrow and will be tasked with driving the development of net zero projects is a big step forward. As is the launch of a green retail bond, the unveiling of a sizeable new green gilt programme, and the confirmation the Bank of England is to get a clear net zero mandate. Add in the promise of yet more R&D funding and the proposals for highly attractive tax breaks for businesses investing in new kit and it looks like one of the greenest budgets in recent years.
This impression is further fuelled by Sunak's evocative support for a green 'future economy'. His peroration was filled with Teesside's offshore wind farms, captured carbon emissions, and decent green jobs. That such a vision is seemingly so embedded within Downing Street and the Treasury is remarkable progress in and of itself. The net zero transition is increasingly one of the top priorities right across the political spectrum and there is little doubt the UK's green economy will continue to prosper mightily over the coming decade and beyond. Sunak has just made an already encouraging green investment climate that bit more attractive.
And yet, so much was missing. There was nothing much on agriculture or aviation or shipping and little on rail, regional development, electric vehicles, or onshore renewables. The controversy over the COP26 coal mine was dutifully ignored. Sunak responded to the uncertainty and frustration over the Green Homes Grants scheme by simply failing to mention it. Worse still, the Treasury documents contained little to nothing on either the existing Green Homes Grant scheme or longer term plans to enhance building energy efficiency. It looks as if the scheme will continue for now but with a much reduced Budget, despite the fact over 100,000 households are desperate to upgrade their homes.
Even the welcome green moves that were announced are more focused on long term investment signals than short term green jobs and immediate emissions savings. It is great the Bank of England and National Infrastructure Bank have a net zero mission, but it will take time for their decisions to filter through to heat pump installation rates. The biggest short term impact on emissions from this Budget comes from the fact fuel duty has been frozen yet again.
Moreover, the measures that have been announced remain badly underpowered. The Green Homes Grant looks like it will be cut from £1.5bn to £320m, assuming that is it survives. The goal of the National Infrastructure Bank is to use £12bn of capitalisation to mobilise £20bn of investment in conjunction with the private sector. But a recent report from the LSE and Aldersgate Group proposed using £20bn to mobilise £80bn of capital. Again, France and Germany have both announced green stimulus plans worth €30bn and €40bn, respectively. The deficit hawks have not been defeated just yet.
There were a lot of good green measures in this Budget and there is no doubt the government deserves considerable credit for both its decarbonisation track record over the past decade and its recognition that the net zero transition is the defining economic story of the coming decade. Sunak's vision of a Teesside reinvigorated by offshore wind and captured carbon was genuinely inspiring. Compared to what it could have been given the way the architects of austerity are already flexing their muscles, this Budget and Sunak's speech were somewhat miraculous.
But for the hosts of the crucial COP26 Summit and a nation committed to both fully decarbonising within 30 years and fending off a lost decade in the wake of the worst economic and health crisis in centuries today's events felt, if not disastrous, then extremely disappointing. I know I sound like a broken record on this, but every four months that passes is one per cent of the available time to build a net zero emission economy. Time is running short.