Budget 2011

Read the Budget 2011 in full

Government funding for the Green Investment Bank trebled and a carbon price floor introduced.

23 March 2011
The Government Budget released today focused on promoting economic growth though improving the attractiveness of the UK as an area for business investment and simplifying the tax system, whilst providing a budget that was fiscally neutral. The Chancellor used the Budget announcement to reiterate the Government’s commitment to being the greenest government ever and increasing the proportion of revenues accounted for by environmental taxes. The Budget announced two key developments in the sustainability agenda with the introduction of a carbon price floor and new announcements for the funding of the Green Investment Bank.  
 


Green Investment Bank funding trebled

 
The Budget announced the Government’s intention to triple the initial funding for the Green Investment Bank (GIB), taking the initial capitalisation from £1 billion to £3 billion. The additional £2 billion in government funding is expected to be found from asset sales including £775 million in proceeds from the sale of High Speed 1. The Budget estimates that Government investment alongside private finance should mean an additional £18 billion investment in green infrastructure by 2014-15.   
 
The increase in funding was also accompanied by the announcement that the GIB will begin operation in 2012-13, bringing this forward one year earlier than expected. The Government will enable the GIB to have borrowing powers from 2015-16 and once the target for debt to be falling as a percentage of GDP has been met.
 

Carbon price floor introduced

 
It has been announced today that a carbon price floor for electricity generation will be introduced from 1 April 2013, following consultation. The Budget states that the carbon price floor will start at around £16 per tonne of carbon dioxide and will follow an increasing linear path to £30 per tonne in 2020. This is a move intended to encourage stability in the price of carbon to promote investment in the low carbon energy sector.
 
The price floor is expected to be implemented through changes to the climate change levy, with the carbon support price for 2013-2014 estimated to be £4.94 per tonne. 
 

Climate Change Agreement extended

 
The Climate Change Agreement will now be extended until 2023. Participants in the climate change agreement will also see an increase in their climate change levy discount on electricity from 65% to 80%. This move, which will come into effect from April 2013, is intended to support energy intensive businesses that are exposed to international competition.


Carbon Capture and Storage


Whilst plans for the provision of public funding for four Carbon Capture and Storage demonstration plants remains unchanged, the Government has amended how the funding for the demonstration scheme will be raised. To remain consistent with the Government’s plans for tax simplification, funding will no longer be raised with a Carbon Capture and Storage levy, but instead the projects will be funded from general taxation. 
 

Aviation Taxes

 
The Government used the Budget today to announce a new consultation into air passenger duty. Whilst the Government did not announce a per plane duty to replace the per passenger duty as had initially been indicated in the June Budget 2010, the consultation will seek to simplify the tax system for air transport services looking to extend the duty to private and business jets and also seek a scheme which reduces global emissions. 
 


Planning


Whilst the Government will retain current controls on green belt land, the budget today announced a number of measures to speed up the planning process in the hope of creating higher levels of investment and improving international competitiveness. These measures included:
 
  • Pilot a land auction model. Starting with public sector land 
  • A move to “introduce a new presumption in favour of sustainable development, so that the default answer to development is yes”. 
  •  Localise choice about the use of previously developed land 
  • Fast track planning process for major infrastructure applications

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