Energy Insight: UK Budget 2017

The Chancellor of the Exchequer, Philip Hammond, delivered his Spring Budget to Parliament on 8 March 2017. Full details of announcements, supporting documents and information are available from Spring Budget 2017:

https://www.gov.uk/government/publications/spring-budget-2017-documents

Paragraphs of particular interest to energy include:

4.6 Energy and transport taxes

5.5 National productivity investment fund

£270 million will be set aside in 2017-2018 to the Industrial Strategy Challenge Fund (ISCF). The first challenges to receive funding include the following:

• “leading the world in the development, design and manufacture of batteries that will power the next generation of electric vehicles, helping to tackle air pollution
• developing cutting-edge artificial intelligence and robotics systems that will operate in extreme and hazardous environments, including off-shore energy, nuclear energy, space and deep mining.”

A summary of the Spring Budget 2017 is offered by the BBC.

Spring Budget 2017: key climate and energy announcements. Simon Evans and Jocelyn Timperley. Carbon Brief. March 8 2017.

Fuel Duty

Fuel duty will be frozen for the seventh year running, unchanged since the budget on 1^st October 2010. It will remain as:

See our datasheets for more information on fuel prices and taxation:

Prices: UK retail prices for petrol, diesel & LPG for road vehicles - showing duty and tax (DSS12)

Taxation: UK taxation on road fuels (DSS11)

North Sea oil and gas

A new panel of industry experts will be established to investigate how tax incentives can assist sales of North Sea oil and gas fields, helping to keep them productive for longer. The suggestion that tax reliefs due to decommissioning costs will be transferable from the previous owner to the new owner of the oil and gas fields will be considered. A discussion paper will follow and will be presented to the House of Commons.

Budget 2017: Chancellor announces North Sea help. BBC News. March 8 2017.

UK Budget opens review of North Sea tax rules. Andrew Ward and Nathalie Thomas, Financial Times. March 8 2017.

Budget 2017: North Sea oil and gas tax options to be reviewed by a panel of experts. Courtney Goldsmith, City A.M. March 8 2017.

Budget 2017: What do the plans mean for Scotland? Russell Jackson, The Scotsman. March 8 2017.

Chancellor responds positively to Oil & Gas UK Budget Asks Oil & Gas UK. March 8 2017

In 2014, the Wood Review was published. This looked at UKCS oil and gas recovery, specifically looking at how economic recovery could be maximised.

Carbon pricing

A new carbon price will be set by the UK at the start of the next Parliament in 2021/22 following the country’s exit from the EU Emissions Trading System.

Budget: Hammond moots new carbon tax regime from 2021 and new renewables cost controls. Brendan Coyne, the energyst. March 8 2017.

Government to set carbon price in 2021/22 following exit from EU ETS. David Pratt, Clean Energy. March 8 2017.

Levy control framework

The existing Levy Control Framework has helped to control the costs of low carbon subsidies. This will be replaced by a new set of controls that will be set out later in the year.

Budget 2017: levy control framework to be replaced. Tom Grimwood, Utility Week. March 8 2017.

Solar Tax Hike

Budget 2017: Solar industry facing devastating 800% tax increase. Ian Johnston, Independent. March 8 2017.

Midland’s Engine strategy

Mentioned in paragraph 5.6 of the Budget, the Midland’s Engine Strategy was published on 9 March 2017. Particular points of interest to energy include:

• “Investing up to £7 million in the Birmingham Thermal Energy Demonstrator. This will support low-carbon technologies through establishing a demonstrator test bed facility in the Tyseley Energy Park.”
• “Previous investment includes £60 million for the development of an Energy Research Accelerator to develop future energy technologies.”

Skills and Education

The Budget announces in paragraph 5.3:

• “T-levels: 16-19 Technical education –The government will increase the number of programme hours of training for 16-19 year olds on technical routes by more than 50%, to over 900 hours a year on average, including the completion of a high quality industry work placement during the programme.”
• “From 2019-20, the government will provide maintenance loans, like those available to university students, to students on technical education courses at levels 4 to 6 in National Colleges and Institutes of Technology.”

What are ‘T-levels’? Gemma Gathercole, Schools Week. March 6 2017.

Budget 2017 UK: "T-Levels" shake-up for young people's technical training promised by Philip Hammond Lynsey Barber, City A.M. March 8 2017.