Extending energy profits levy sends out wrong signal to green investors: Beckie Hart

In what many expected to be a ‘retail’ budget aimed mostly at consumers, the Chancellor kept his focus on addressing the structural challenges facing the economy.

While eye-catching announcements for enterprise were thin on the ground, business leaders can look back on the Budget as the Chancellor’s third act in his plan to inject sustainable momentum into the economy - while maintaining welcome discipline in the fight to bring down inflation.

Having delivered a sizeable down payment to business confidence in last year’s Autumn Statement, alongside a bumper incentive for private investment, the Chancellor built on that platform by prioritising policy clarity and focusing on delivery.

For example, further detail for providers on how childcare reforms will be implemented was hugely welcome – and is something that CBI members have been asking for.

In combination with the reduction in high marginal tax rates for working parents and the cut in National Insurance Contributions, it also represents a sizeable intervention to incentivise work at a time when access to labour is a major obstacle to business growth.

There was also welcome news that the government plans to build on the full capital expensing announcement made in the Autumn Statement.

New draft legislation will extend the provision to leased and rented assets, meaning that even more companies can potentially benefit and invest with confidence in their UK operations.

Where there will be some hesitation is on the ambition for green growth and the transition to net zero.

The CBI’s own analysis shows that the UK’s Net Zero Economy grew by 9 per cent over the last year, emphasising the huge potential of green industries. While the announcement of timings for the new grid connectivity process was welcome, extending the energy profits levy weakens the sector’s competitiveness and sends out the wrong signal to investors desperate to back the country’s push towards green growth.

With the UK needing to increase investment from the £10bn a year it currently spends to £50bn by end of the decade, we need to double down on those ambitions to realise the wealth of opportunities on offer.

Finally, one area of missed opportunity concerns the enabling role that business can play in addressing the high levels of economic inactivity in the labour market. With many workers at risk of leaving employment because of ill-health, it was disappointing to not see any movement on our ask to leverage the tax system to deliver on health incentives – such as making Employee Assistance Programmes a fully tax-free service.

For a Budget that wasn’t supposed to be ‘for business’, the Chancellor made some reassuring moves that will help generate the economic momentum we need.

Sober and sensible might not garner much fanfare, but the Chancellor’s ‘third act’ budget could just be the right approach for these more cautious and restrained times.

Beckie Hart is CBI regional director for Yorkshire and Humber