This piece originally appeared in BusinessGreen on 27th November 2017
I’m now a veteran of many Budget Day speeches in Parliament, and one thing I’ve noticed over the years is just how many members are sitting (if you can find a seat that is), with notebook or piece of paper on knee, scribbling away as the Chancellor makes his speech.
They could of course check for themselves what the Chancellor has said later in Hansard, but I think it is more than this. It is about checking off for themselves the points the Chancellor might be making that tick their own personal lists – and indeed, I’ve seen members do exactly that, as the speech progresses.
We’ve been promised an announcement in the Budget for some time – and indeed, the government has effectively ‘borrowed’ the £700mn it announced for support of offshore wind (£200mn of which has already gone from auctions on offshore schemes deliverable in 2021-22) from the putative forward framework up to 2025.
But what would the rest of the picture look like? Clarification has become quite urgent, since it is schemes in the planning stage now that will need to know the regime for their roll out – which inevitably takes a few years to complete.
But my pen stayed sheathed until the Chancellor sat down. There was no mention of what was to happen to the Levy Control Framework.
At which point of course, one does the next best thing, which is to rush round to the Vote Office, get the Budget documents and find out what is going on below the radar level of the Chancellor’s Speech. And there it was, not mentioned by the Chancellor, but clear in its simplicity: para 4.5.1 of the Budget book. There will be no replacement for the Levy Control Framework – that is “no new low carbon electricity levies until the burden of such costs is falling. On the basis of the current forecast this means that there will be no new carbon levies until 2025”.
The answer to the question about what the future Levy Control Framework looks like is “there will be no Levy Control framework because there will be no levies”.
The bald facts are accompanied by a marginally more explanatory document alongside the Budget entitled Control for Low Carbon Levies – a slight misnomer, since there will be no levies to control – which does clarify that the remaining ‘borrowed’ money for support of offshore wind will be regarded as an existing levy and therefore not covered by the new rule, as will the as yet unlevied allowance for Hinkley Point C power station coming on stream in 2026 or so. Otherwise, nothing.
So one thing is clear: there will be no more support for solar, onshore wind or indeed further-from-market technologies such as tidal and wave. It also looks as though any future application for nuclear CfDs will logically be resisted under this rule.
As for the 2025 date and the “burden of costs” caveat set out in the new non-Levy Control Framework? Well, I don’t know whether it is deliberately supposed to be obfuscatory or not, but a system that has inherent in it 15 year tails on the ROCs and CfDs already in place is not going to reduce its costs until those tails have passed through, which is a much longer timescale than 2025, so probably no such support for a number of years to come after that date.
Moreover, depending what the Chancellor means by ‘levies’ there is the possibility that plans to extend the Energy Company Obligation (funded by a levy) to tackle energy efficiency in buildings as set out in the government’s Clean Growth Strategy will not happen either.
Altogether then, a mighty axe blow at the fundamentals of the next phase of renewable deployment. It looks to me that a substantial part of the UK’s renewable industry will have to shut down, unless ways to introduce technologies wholly free of underwriting can be introduced.
All of which, I suppose, was why it wasn’t mentioned in the section in the speech about the planet and its future, because it seems this represents precisely the opposite of such a sentiment, and in a serious and long term damaging way. It will teach me to sit in debates with notebook at the ready, though, and perhaps make me just a tad more cynical about the difference between what is in a Budget, and what the chancellor says is in it when he tells us about it in Parliament.