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24 November 2023updated 29 Nov 2023 2:15pm

Why the Autumn Statement was a hammer blow to Labour’s green ambitions

Cuts are now baked into the next government's base budget. Any new tax rises or growth windfalls will be plugging departmental spending gaps.

By Jonny Ball

Jeremy Hunt stood up in the Commons to deliver his Autumn Statement this week. He painted a rosy picture of rising wages, falling debt, and reduced taxes. He might be the only man in Britain who believes any of this. Real wages, despite a recent uptick, are lower than they were 15 years ago, back when The Ting Tings had a massive one-hit-wonder with “That’s Not My Name” (which I think we can all agree feels like a different age).

Meanwhile, public debt is up, in both absolute numerical terms and relative to GDP. And despite Hunt’s cuts (careful repeating that quickly) to national insurance contributions, we’re stuck with the odd combination of a dilapidated public realm, record high public spending, and the highest tax burden in seven decades which nevertheless fails to deliver services to anywhere near the standard that voters expect.

So what does it all mean for the green transition? Well, despite the positive window dressing, the Chancellor has chosen to set what is known in specialist circles as A Massive Political Trap for the Opposition, by setting departmental spending in cash terms. That means, in per-capita real terms (adjusted for inflation), unprotected departments will see budgets fall by 14 per cent in the next five years – equivalent to the proportion that the austerity-mad George Osborne swung his axe at.

Part of this comes from massively reduced capital budgets, used for things like investment in mass public transit networks (needed to decarbonise transport), new energy and grid infrastructure, or any other fixed assets for the public sector, like more energy-efficient social housing, hospitals, schools or public buildings.

For Labour’s Rachel Reeves, hoping to enter Number 11 next year, that’s a problem. It means she will have to stick with Hunt’s budgets (meaning big cuts), or will have to revise them with tax rises or more borrowing – contravening her fiscal rules. With all this in mind, the slow, cautious acceleration towards the £28bn-a-year Green Prosperity Plan looks set to get even slower should Labour march to victory after 18 years of election night hurt (never stopped them dreaming, etc.). Any new spending, perhaps funded by tweaks to capital gains, dividend taxes, or non-dom status, looks set to be eaten up by keeping local councils, police and fire services, transport, planning and everything else just ticking over.

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Aside from laying out bear traps for political opponents, the Autumn Statement had a fair amount to say about planning in particular. There appears to be a broad consensus from both parties that planning bottlenecks are holding back the development of the new grid infrastructure that is essential for reaching net zero. As Megan Kenyon has pointed out, it can often take new connections to power and electrical infrastructure 15 years to get the green light. Environmental impact assessments (EIAs) on infrastructure can cause big delays. For the Sizewell C nuclear power plant, the EIA was “44,260 pages long – ‘more than 30 times longer than the complete works of Shakespeare’”, according to the campaign group Britain Remade. 

Policy-bods across the political spectrum seem to think building new power lines and energy generation projects can, and should, be made much easier. Indeed, if we have any hope of meeting climate commitments, we need to start building this infrastructure much faster.

As Megan writes, Hunt and Reeves both want to “dramatically reduce the time taken for major applications to be given a decision, and offer community benefits” for those areas that projects affect. This includes government measures to offer funding to communities where new infrastructure is built, so properties closest to new power lines could receive up to £1,000 a year off their energy bills, and communities hosting pylons will be given money for projects in the local area.

That might be enough to turn a few nimbys into yimbys (yes, that’s a thing), so Labour will be glad the Tories have made a start on these kinds of planning reforms. But on the broader issue of fiscal tightening and yet another decade of austerity, major headaches are just round the corner.

This article was originally published as part of Spotlight’s weekly Green Transition newsletter. Subscribe here.

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