Chancellor Rishi Sunak will deliver the Autumn Spending Review and Budget on Wednesday, with businesses and consumers across the country awaiting details on how new changes will affect them.
Over the last year, as the coronavirus pandemic ripped through the economy, the UK increased its spending to help support struggling sectors, as well as households.
However, fast forward to today and the economy is now dealing with high public sector borrowing, a supply chain crisis, and rising inflation.
The budget will set out the plan for public spending over the next three years, but companies such as Greenpeace and EY are highlighting the need to tackle climate and nature emergencies whilst supporting the economic recovery from COVID-19.
This includes calls for Sunak to bring in levies on green energy and to scrap VAT on green goods such as insulation, solar panels and electric cars, and on services like retrofitting homes to make them low carbon.
The UK currently stands in sixth place out of the G7 nations for investment in climate infrastructure, lagging behind its peers in green jobs and investment plans, according to a report by the Trades Union Congress (TUC).
Greenpeace said the upcoming budget is “an opportunity to get the UK back on track with a green stimulus”, as well as gaining credibility ahead of the COP26 climate conference taking place in Glasgow next month.
“The overwhelming economic consensus is that the focus should be on supporting economic recovery, rather than considering spending cuts or major tax increases to reduce the deficit,” Greenpeace said.
In a budget survey conducted by EY, attracting investment into the UK was listed as a top priority by two-thirds of respondents, with particular focus on those incentives that will fast track the UK’s transition to a greener economy.
The 1,000-plus businesses surveyed, there was a strong recognition of the need to raise revenue, with over half the respondents (56%) thinking that the finance minister should be acting now or next year on raising taxes.
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Of those looking at tax rises, the majority were of the view that consultation should precede tax rises which should follow next year.
Greenpeace added that an extra £73bn ($101bn) of public investment is needed over the next three years in green homes, clean transport, nature, circular economy and support for workers to transition to green jobs. This would create some 1.8 million jobs in ready projects over the course of four years.
About 17% of UK greenhouse gases come from buildings, with 14% coming from homes. Greenpeace said it would not be possible for the UK to meet its net zero target without “substantially scaling action and investment on decarbonising housing”.
The Climate Change Committee (CCC) estimates that by 2050, 75% of our homes will be heated by heat pumps. The UK is currently lagging behind its continental peers on the roll out of heat pumps, and the government’s current plan to decarbonise homes will not cut emissions enough to meet its own legally binding climate commitments, Greenpeace said.
It called for an extra £12bn of public investment to green our homes over the next three years (with £4.76bn for heat pumps, alongside £7bn for energy efficiency).
Transport is the largest source of carbon dioxide emissions in the UK and a major cause of poor air quality.
The Transport Secretary has previously acknowledged that in future “public transport and active travel will be the natural first choice for our daily activities”, and has confirmed some spending to make this happen.
However, Greenpeace said to “truly unlock the levelling up potential of transport investment, we need to be far more ambitious.” It is asking for the provision of at least £11bn per year.
Some £4.6bn of extra public investment is needed per year to help fill the gap between existing funding commitments, and the level of investment needed to meet the government’s nature and climate targets.
Greenpeace said that includes £2.26bn per year for restoring and protecting habitats and species across the UK to halt the decline of nature by 2030; £1.83bn per year to support greater access to nature where people live and work; and £483m per year for advice, data, enforcement, and capacity-building to underpin our environmental commitments.
Chris Sanger, EY’s head of tax policy, said: “Following the recent launch of the government’s net zero strategy, the Budget could be used as an opportunity to boost the UK’s green economy and put a stake in the ground ahead of COP26 which is only days away.
“To elevate Britain’s green credentials, the Chancellor could use his speech to expand on the government’s ten-point plan and net zero strategy, to help position the UK as a global leader and an attractive destination for investment. That said, he may choose to keep his powder dry until the global climate conference has concluded, affording him the opportunity to make a bold statement of intent to further boost the UK’s green credentials.”