Energy Secretary speech and the Spring Budget


Speech by the Energy Secretary

On Tuesday 12 March Claire Coutinho, the Energy Security and Net Zero Secretary of State, spoke on energy at Chatham House. Placing great emphasis on “keeping citizens safe and warm…when the sun doesn’t shine and the wind doesn’t blow” and energy security, she pledged to build a new raft of gas power stations to replace the 15GW of capacity that is reaching the end of its life. This government likes to talk about oil and gas to defend issuing new exploration and exploitation licences, which the Climate Change Committee says is incompatible with its legal carbon reduction targets. It is ironic that it is our dependence on gas and the fact that it is traded at international market prices, whether produced in the UK or not, that caused the energy price crisis. The effective ban on developing onshore wind in England since 2015 meant that the cheapest form of energy, second only to gas in generating UK electricity, has not been able to grow. As a result average bills are some £200 more a year that they would have been had onshore wind continued to grow.

The Telegraph had trailed that Coutinho might lift the ban on onshore wind. She did not. She did however launch the second consultation on the Review of Electricity Market Arrangements (REMA) which proposes Locational Pricing of electricity which will make it more expensive where demand is high and supply low such as around big cities. This will encourage wind and solar to locate near to areas of high demand. This is sensible and will favour community energy which essentially is based where people live and seeks to serve its community.

But, again ironically, the incentive cannot work if it is functionally impossible to build wind in England. Since the government purported to relax planning around onshore wind, in September, not a single planning application for onshore wind in England has been submitted! The last CfD round saw not one single application for offshore wind because the strike price had been set so low. The government has failed to tackle energy efficiency of UK homes, the leakiest in Europe, or the grid connection issue which is delaying many grid decarbonisation projects by up to decade. The Budget did nothing to address these issues either.

So they pledge more gas power stations which will be ‘net-zero ready’ ie will be able to be powered by green hydrogen or to capture their carbon. These two ‘future technologies’ are receiving hundreds of millions of government money which if spent on not needing the fossil fuel generation (via energy efficiency or renewables) would permanently remove the need for these expensive mitigation measures. The Guardian reports that ‘one chief executive of a gas plant operator said the changes were unlikely to trigger a new wave of plants. “In reality, we can keep updating plants which are nearing the end of their life at relatively low cost,” they said.’ The government’s claim to be defending consumers by taking decisive action on building new gas power stations is false and cosmetic.

CEE will update members further on the government’s proposals on ‘zonal’ locational pricing and encourage them to feed in their views to us and/or respond to the REMA consultation.

The Spring Budget 2024

On 6 March the Chancellor spoke for 65 minutes. He didn’t mention climate change once or pledge any serious public investment in public services or the green economy and energy transformation (to stimulate private investment). Full details are here. He insisted the economy and investment are growing (despite the UK having entered a technical recession and the UK is below the G7 average for public investment and lagging at the bottom of the league table for private investment). He insisted he was lowering taxes, despite the government having presided over a period of the highest taxation in 70 years. It was an electioneering budget, cutting National Insurance by 2% costing the Exchequer £47.7bn over 5 years. The New Economics Foundation analysis shows that this, along with Child Benefit changes, will benefit the top 20% of earners 12 times more than the poorest. These tax cuts will be paid for by public spending cuts in the future, hamstringing the next government. They increased tax on smoking and vaping and borrowed the Labour policy of taxing ‘non-doms’, non-domiciled individuals, from 2025 which will raise £9bn. They are extending the Energy Profits Levy on oil and gas companies (which allows them to offset 90% of investments in more oil and gas! ) by one year until March 2029, raising £1.5bn. The Office for Budget Responsibility told the Treasury Select Committee ‘we don’t know’ how the Chancellor will make his budget spending plan add up. 

There were almost no mentions of energy. No follow up to the Energy Price Guarantee despite most energy bill support programmes ending imminently and 6m households remaining in fuel poverty across the UK, even after April’s Energy Price Cap reductions (NEA estimate). 

Fuel Duty was frozen for the 10th year in a row, which has cost £90bn over that time, benefits the wealthy most and means that emissions from transport are 7% higher than they would have been had the duty escalated as originally planned. They have frozen Air Passenger Duty for domestic and short haul flights. (In France internal flights are banned where the train journey takes less than 2.5 hours!)

They are exploring another large scale nuclear power station project (vastly expensive, won't deliver in time and ties us into looking after dangerous waste for longer than human civilisation has been around) and are buying 2 nuclear power stations for £160m from Hitachi who are exiting the UK.

A few small positive measures are listed below. You may like to look at the list of places at the bottom to see if your project can benefit from government investment in them. Do let us know if you can.

The premium historically paid by customers on Pre-payment Metres was removed last year and has been made permanent in this Budget. The Household Support Fund has been extended by six months. For those on Universal Credit taking out advance budgeting loans for emergency expenses the repayment period has been extended from 12 to 24 months. The £90 admin fee of Debt Relief Orders for those with problem debt has been removed and the maximum debt value threshold is increased from £30,000 to £50,000.

North-East trailblazer devolution deal, providing a package of support for the region potentially worth over £100m.

“… allocating £100m of levelling up funding to areas including High Peak, Dundee, Conwy, Erewash, Redditch and Coventry to support cultural projects in these communities, alongside support for capital projects across the country including in Bingley…

… we are expanding the long-term plan for towns to 20 new places including Darlington – home of the Treasury’s Darlington Economic Campus - Coleraine, Peterhead, Runcorn, Harlow, Eastbourne, Arbroath and Rhyl, providing each with £20m of funding to invest in community regeneration over the next decade…

… we’ll provide £15m in new funding to the West Midlands Combined Authority to support culture, heritage and investment projects

… and we’ll allocate £5m to renovate hundreds of local village halls across England so they can remain at the heart of their communities.

launching a new £20m Community Led Housing scheme supporting local communities to deliver the developments they want and need.