Monday 26th September 2016                 Change text size:

Summer Budget 2015: renewables Climate Change Levy exemption to be scrapped



George Osborne By altogetherfool via Flickr

Chancellor George Osborne has delivered the first majority Conservative government Budget since 1996, including plans to scrap an “out-dated” Climate Change Levy exemption on renewable electricity.

Presenting his Budget, Osborne said the plans set out put “security first” and was for “working people” who have worked hard and sacrificed over the past five years. He argued the Budget would move Britain from a low wage, high tax, high welfare economy to a higher wage, lower tax, lower welfare country.

However, groups have criticised the Chancellor for failing to present a green budget despite the Conservative previously stating ‘vote blue, go green’ five years ago. As the Conservatives are no longer in coalition it was hoped they would take stronger measures on the environment and energy.

A particular area that is drawing criticism is the decision to scrap the climate change tax exemption for renewable power, while confirming tax reductions on North Sea oil and gas

Osborne said, “The large tax reductions on North Sea oil and gas I announced in March are going ahead, and today we broaden the types of investment that qualify for allowances.

“Now we have a long-term framework for investment in renewable energy in place, we will remove the out-dated Climate Change Levy exemption for renewable electricity that has seen taxpayer money benefitting electricity generation abroad.”

Commenting on the Budget, Catherine Mitchell, professor of energy policy as the University of Exeter, said, “The government says that it wants a sustainable, secure and affordable energy system, but recent rhetoric and policy changes are taking us further away from that goal.

“The ending of subsidies for onshore wind farms, our cheapest low-carbon electricity source, the failure to exploit the potential of energy efficiency, the removal of the Climate Change Levy exemption for renewable energy, and support for unpopular fracking and extortionately expensive nuclear power doe not add up to a credible energy policy.

She added, “Based on recent policy announcements, we in Britain are going to be left entirely behind unless we start to embrace change and move with the prevailing tide.”

Environmental organisation WWF has also criticise the Chancellor, arguing that private sector investment needs consistent long-term policies if it is to support energy efficiency and renewable instead of “sporadic fiddling with previously announced support”.

“[The Chancellor] should be using the first Conservative-only Budget for almost two decades to put the country on a cost-effective path to a sustainable economy and secure our energy supply far into the future,” David Nussbaum, CEO of WWF-UK, said.

Other measures announced in the Budget include increasing the national living wage to £9 an hour by 2020, increasing the tax-free personal allowance to £11,000 in April 2016 and reforms to the welfare system, including freezing working-age benefits for four years from 2016/17.

Osborne confirmed that from April 2017 individuals will be able to pass their home onto children or grandchildren tax-free after death, as early predictions of the Budget suggested.

It was also announced that the government will “clamp down” on tax avoidance, planning and evasion through extra investment, including making sure international companies pay tax on profits diverted from the UK.

Photo: altogetherfool via Flickr

Further reading:

DECC budget cuts could put energy and climate plans at risk

UK carbon budget ‘feasible and economically sensible’

Budget 2015: summary

Budget 2015: What the papers say


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