In the first (and, as it turned out, last) autumn statement since the vote for Brexit, the hope was that chancellor Philip Hammond would shed some light on the new Government’s economic agenda.
What we got was mostly a placeholder. Although there were a few key policy announcements, there was no explicit framework for an industrial strategy, no discussion of the potential policies which may be included in the much anticipated 25-year environment plan from Defra, and no clarity around the Government’s stance on future relations with the EU.
The new £23bn National Productivity Investment Fund was widely welcomed, but the statement indicated that this money would be focused on housing, transport, telecoms and R&D. The extent to which this will directly benefit the waste sector is unclear.
Renewable energy also remains in limbo. A key decision on the future of the levy control framework, which sets a cap on the forecast costs of certain policies funded through levies on energy suppliers, has been deferred until the 2017 Budget. There was also no mention of the timetable for future Contract for Difference auctions.
However, there was broad relief at the decision to maintain the carbon price floor despite some reports to the contrary ahead of the speech.
One of the bright spots for the waste sector in Hammond’s statement was the inclusion of water and waste in a list of different aspects of economic infrastructure. The Government described these as “crucial for the economy and for people’s daily lives”.
The list was included in the section on the National Infrastructure Commission, which set out a fiscal remit for the organisation, and committed to ensuring that Government investment in the area the commission covered saw spending rise to 1% of GDP.
Most of the programmes explicitly discussed in the autumn statement were focused on housing and transport, but a section on a study of emerging technologies which can improve infrastructure productivity could potentially provide opportunities for the waste sector.
More broadly, the statement provided little evidence of a wider consideration of issues related to resources and sustainability. Resources & Waste UK director general Steve Lee noted in his remarks on the day: “Sustainable growth must be viewed through a lens that takes account of future resource constraints and climate change impacts… [It] is disappointing not to see this reflected, at least at a high level, in today’s announcement.”
He is not alone in arguing that the Government’s spending decisions do not sufficiently take account of the environment. The Environmental Audit Committee’s (EAC) recent report, Sustainability and HM Treasury, published before the statement, argued that the Treasury failed to consider long-term costs and benefits to the environment while making its decisions.
The committee went on to propose that the Treasury establishes a consistent framework for other departments to provide supplementary evidence, and to ensure there was concrete evidence about how natural capital would be incorporated into the policy appraisal process. At present the department’s decisions do not appear to reflect a change in priorities.
Although prime minister Theresa May cast herself as a reformer on the steps of Downing Street, the ‘conservative’ approach from her chancellor was somewhat removed from this notion.
While the new fiscal framework announced by Hammond moves away from previous incumbent George Osborne’s commitment to achieving a budget surplus by 2020, the announcement of a new fiscal charter, the focus on reducing welfare spending and an emphasis on supply side measures suggest anything but a rejection of his predecessor’s legacy.
Rather than starting with a blank slate, the autumn statement suggested that the Government was built on the same principles as its predecessor but is responding to different circumstances.
In this context, structural changes within Government accounting methods suggested by the EAC are possible but would be difficult to achieve without sustained pressure from industry, campaign groups, select committees and bodies such as the Committee for Climate Change. This is in part because such a system may force the Government into short-term expenditure with distant gains at a time when the nation’s finances will already be strained.
However, if the Government can be convinced that taking such a step would help the UK seem like a more hospitable environment for a rapidly growing industry and induce private investment, then it may be convinced to adopt the new method.
“Water and waste were included in a list of different aspects of economic infrastructure, described by the Government as ‘crucial for the economy and for people’s daily lives’”
Defra’s long-term environment plan will provide an opportunity for the consideration of such programmes and for the incorporation of key principles such asthe circular economy into policy making.
While this may help to provide some long-term certainty around Government plans, it is possible that it will seek to avoid limiting ministers’ hands ahead of the Brexit negotiations by introducing new regulations that businesses may consider burdensome. If so, the plan may either be broad in its assertions or relatively loose in its commitments.
But if the Government believes it could boost exports, attract investment, or help local and national government achieve significant savings in the near future, then it may be convinced to outline bolder steps and reforms.
One example of steps it is willing to take is the consultation on the Renewable Transport Fuels Obligation by the Department for Transport, which aims to increase the supply of waste fuels, encourage the production of development fuels and set the maximum level for the supply of fuels from food crops.
On the same day, the Government pledged £20m for an advanced renewable fuel demonstration competition to build demonstration-scale advanced renewable fuel plants in the UK and to target the decarbonisation of lorries and planes. The announcements were followed by retailers including Waitrose, John Lewis and Argos pledging to using compressed natural gas from food waste in their HGV vehicles.
Government investment or support which can help to drive action from the private sector is more likely to be backed than plans which could introduce significant new costs on businesses.
Given that the Government has taken on the task of redrawing one of Britain’s core international relationships in the space of two years, a focus on the long-term impact on the environment is unlikely to prove persuasive. The most effective way to encourage it to adopt reforms will be for the waste and resources sector to provide it with evidence of tangible short-term gains.
Madhav Bakshi is political analyst at DeHavilland