In recent weeks the government’s commitment to remaining within its fiscal rules have been challenged due to reforecasts on the performance of the UK economy, leading most notably to a series of welfare cuts. At yesterday’s Spring Statement, the Chancellor Rachel Reeves reinstated the government’s commitment to a mantra of growth amidst a changing world of conflict and an uncertain global economy.
The supply and cost of energy, alongside the ongoing climate crisis has played a large part in generating the conditions for this changing world yet energy and climate barely featured in the statement. The only notable announcement was that the government was committed to removing the Climate Change Levy (CCL) from electricity used in electrolysis to produce hydrogen and help support the growth of low-carbon electrolytic hydrogen which will help decarbonise the energy grid. It was also announced that a wider review of the CCL charge would take place. Instead focus for generating growth was firmly put on defence spending and housebuilding by the government, suggesting these to be the areas of future priority.
The muted discussion of energy, climate and net zero comes just days after the energy secretary Ed Miliband stated that the government is “absolutely up for the fight” over its climate credentials, with the first major project of Great British Energy being announced as a £200m investment for installing solar panels on the roofs of schools and hospitals. Despite this announcement, the lack of discussion at the spring statement alongside commitments to reduce the levels of government debt and borrowing, indicate that it could be a turbulent time ahead for the government’s climate plans and ultimately the road to net zero. With many of the government’s energy and climate plans requiring strong will and significant funding could these be the next area of government spending to see cuts? Especially as opposition parties ramp up their attacks on the net zero agenda and the policies needed to achieve it.