What does Labour’s autumn budget mean for the Environment?

• Carbon Capture Storage (CCS) initial fund of £3.9 billion
• The Warm Homes Plan has been allocated £3.4 billion
• Continued development of the Sizewell C nuclear power plant, with £2.7 billion being provided in 2025/26
• Establishment of the state-owned Great British Energy, with an initial investment of £125 million and the initially pledged £8.3 billion to be allocated in subsequent years
• £163 million for the Industrial Energy Transformation Fund
• Energy Profits Levy to increase to 38% from 1st November 2024
• National Wealth Fund to catalyse £70 billion of private investment in clean energy and growth initiatives, including investments into gigafactories (for batteries or electric vehicles), as well as ports to green hydrogen
• A fund to be allocated to supporting an accelerated plan to improve grid connection and building a new network, in partnership with the National Energy System Operator (NESO) and energy regulator, Ofgem
• Funding support will be provided for the first round of electric hydrogen contracts with 11 producers
• The Government has commissioned an advisory report from NESO on how to reach Net Zero in Great Britain by 2030
• Improving the UK’s port infrastructure with £134 million to help facilitate the development of floating offshore wind farms

The Government has prioritised investment into new technologies and the energy transition, following advice from the International Monetary Fund.

Commentary has also been made that, although the budget helps to deliver the Government’s “mission to make Britain a clean energy superpower” and seeks economic decarbonisation, there are concerns that the announced fuel duty freeze may impede efforts to address traffic (and therefore air) pollution.

• The budget outlines a £4.5 billion initiative to improve water infrastructure, aimed at reducing leakages and improving drinking water quality. A substantial portion, £1.5 billion, is designated for projects that aim to reduce water leakages by 25% by 2030.

• Electric vehicles: a "phase-out date of 2030 for new cars with internal combustion engines"
  • From 2035, the sale of all new cars and vans will have to be “zero emission”. The budget included several incentives to support the roll-out of electric vehicles, including tax incentives to encourage people to buy them 
  • Company car use of electric vehicles have benefited from generous tax breaks. The budget confirmed that benefit-in-kind (BIK) tax rates for company cars will continue to favour electric cars, increasing by 2% per year until 2029-30
  • Funding of £5 billion for an EV charging network for 100,000 charge points has also been allocated

Further transport considerations include:

• £2 billion to be allocated across the automative sector research and development and improvements to supply chains
• The bus fare cap is to be extended until December 2025 at the higher rate of £3
• Air passenger duty will increase by 2026/27, with an additional 50% for private jets
• A freeze on fuel duty rates in 2025/26

 Further budget allocation to infrastructure projects:

• Ensuring the delivery of the TransPennine upgrade connecting York, Leeds, Huddersfield, and Manchester
• Increasing funding by £200 million (to a total of £1.3 billion) for urban transport schemes through City Region Sustainable Transport Settlements, for projects such as Liverpool’s Baltic Railway Station, the renewal of Sheffield’s Supertram system, and the continued development of West Yorkshire Mass Transit
• Improving East West Rail services between Oxford, Milton Keynes, and Cambridge
• Ensuring that HS2 will go to Euston station
• Road maintenance: an additional £500 million will be allocated to maintain and renew roads in 2025-26 (with total roads maintenance and funding of £1.6 billion)
• Upgrades to cycling and walking paths with an additional £100 million allocated in 2025-26 for cycling and walking infrastructure, which will support local authorities’ efforts to upgrade pavements, paths and cycling arrangements

Overall, transport professionals have welcomed the commitment to a long-term strategy of improving connectivity, through investing in large infrastructure projects as well as local towns and villages. However, although plans for electric vehicles and charging points have been praised with regards to the United Kingdom’s decarbonisation objective, there is concern that the tax incentives pose a challenge to the rollout of an equitable decarbonisation process, as they benefit only those who can afford the initial cost of electric vehicles.

• £400 million budget for tree-planting and peatland restoration throughout 2024/25 and 2025/26
• Infrastructure and housing development, which includes nature recovery, due to Biodiversity Net Gain requirements, has been allocated £70 million. This includes £14 million for the Nature Restoration Fund to offset the environmental impact of development, with a developer contribution, and £13 million to expand Protected Sites Strategies in priority areas
• The Government has promised to address the £2.4 billion budget for flood resilience over two years, though a plan is yet to be laid out
• Research and innovation for climate resilience and net zero goals to be provide £58 million budget across two years

Daisy Jameson, Policy Fellow at the Grantham Research Institute on Climate Change and the Environment, stated that the Government have not committed to spending on climate adaptation what is needed to mitigate the risks to human livelihood and lives. The Institution of Civil Engineers recommended that “the government should undertake a national review of the economics of adaptation to ensure that climate resilience and adaptation are better valued in spending decisions.”

• An introduction from January 2027 of the carbon border adjustment mechanism (CBAM) to support emissions cuts in sectors such as aluminium, cement fertiliser, hydrogen, iron, and steel, aiming to encourage investment in low carbon sectors
• The Foreign, Commonwealth and Development Office (FCDO) is forecasted to spend more than £2 billion on internal climate finance in 2024-25

• A £5 billion budget is to be provided over the next two years to support “more productive and environmentally sustainable agricultural sector in England”
• There will also be a £60 million Farm Recovery Fund
• The Government also announced reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) from inheritance tax. The Government will publish a technical consultation by early 2025 with reforms planned for April 2026

Concerns have been raised over the Chancellor’s decision to reduce Agricultural Property Relief, which will reduce tax relief on inherited land, making it progressively difficult to pass farms down through generations without substantial financial strain. This has prompted some within the industry to consider action, such as strikes or disrupting food supply chains, as a response to what they view as an existential threat to their livelihoods and the farming heritage.

• NHS capital investment increased overall to £13.6 billion for 2025-26. This includes additional funding for new surgical hubs and diagnostic scanners and to remove dangerous reinforced autoclaved aerated concrete and make inroads into the existing backlog of critical maintenance, repairs, and upgrades across the NHS estate
• £6.7 billion investment for schools’ capital in 2025-26, including allocation to the schools rebuilding programme and maintenance in 2025-26
• The budget allocates £2.3 billion to prison upgrades and expansion across 2024-25 to 2025-26 to create more prison beds and reduce overcrowding