The Rt Hon Jeremy Hunt MP
Chancellor of the Exchequer
14th November 2023
I am writing to you ahead of the Autumn Statement on 22nd November to outline five critical steps which are needed to tackle the cost-of-living scandal, restore our natural world and transform the UK’s economy so that it is fit for the twenty-first century.
2023 is currently on track to be the hottest year on record, the world has been battered by seemingly relentless climate impacts, from devasting floods in Libya, to extreme heat and wildfires in Europe. It could not be clearer that urgent and transformative action is needed to safeguard the planet for future generations and put an end to our dependence on fossil fuels. However, when the Prime Minister stood up to debate the King’s Speech in the House of Commons, he doubled down on recent efforts to undermine the climate consensus and continued to falsely pit delivering our climate targets against supporting families – claiming that his Government was “cutting the cost of net zero for working people”. In fact, despite the Prime Minister’s assertions, new North Sea licences will not bring down energy bills because the oil and gas will be sold to the highest bidder on global markets.
Shifting to a zero-carbon economy makes both economic and environmental sense and would also unleash a myriad of benefits for the whole of society. The “Independent Review of Net Zero” which was commissioned by your predecessor and carried out by the Rt Hon Chris Skidmore MP, found that “net zero is the economic opportunity of the 21st century”. And Fatih Birol, the Executive Director of the IEA has observed that the clean energy transition offers “new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access and a safer climate for everyone”. Indeed, the Climate Change Committee warned in 2020 that a slower path to net zero than that set out in the Sixth Carbon Budget would risk new economic opportunities being missed.
Reducing our reliance on fossil fuels and investing in the green economy is imperative to meeting our climate targets, and this transition also provides the opportunity to create hundreds of thousands of new jobs, reinvigorate communities across the UK, and create a fairer economy which values people and planet above narrow measures like GDP growth.
- Addressing the cost-of-living crisis
As you will be aware, households are facing energy bills that are double what they were two years ago, with a staggering 6 million households in fuel poverty as we head into winter. It is deeply concerning, therefore, that the Government has so far failed to announce any financial support for vulnerable households and I urge you to rectify this when you deliver your Autumn Statement. Last year, excess winter deaths from living in cold and leaky homes increased by almost 50 percent and it is imperative that the Government takes urgent action to prevent further tragedy.
As you will be aware, two-thirds of privately rented properties in England and Wales fall below EPC C and over a quarter of renting households in the UK live in fuel poverty. It is therefore deeply disappointing that the Government has scrapped the proposed upgrade in Minimum Energy Efficiency Standards for private rented homes which would have saved households over £300 a year at current prices. If the Government continues to refuse to upgrade standards, I urge you to look at other measures to encourage landlords to improve the energy efficiency of their properties, including tax incentives and green loans to support higher standards, as have been introduced in other countries including France, Germany and Scotland.
I also urge you to reform the UK’s energy billing system for the long-term, so that no one faces the injustice of fuel poverty, and specifically to look at proposals such as a rising block tariff with either a heavily discounted or a free energy block for those in greatest need. For example, a National Energy Guarantee, as proposed by the New Economics Foundation, would provide a universal allocation of energy at very low cost to cover a household’s basic needs, with higher prices charged for higher energy uses. Crucially, this policy would be accompanied by allowances to protect vulnerable households.
- Tackling the economic risks of fossil fuels
The UK has one of the most generous tax regimes in the world for oil and gas production, and thanks to the 80% investment allowance under the Energy Profits Levy, companies are able to claim £91 in tax relief for every £100 invested in the North Sea. The reality of this policy is that the British public carry almost all the costs of developing oil and gas projects, whilst private companies pocket the profit. This is particularly egregious in relation to Rosebank – the largest undeveloped oil field in the North Sea – which was recently approved by your Government, and for the development of which, Equinor will be able to claim over £3bn in tax relief.
In the context of the climate and cost of living crises, handing public money to the development of fossil fuels is utterly unacceptable. When you deliver your Autumn Statement I therefore urge you to act on the commitment in the Glasgow Climate Pact, which calls on countries to accelerate efforts towards the “phase-out of inefficient fossil fuel subsidies”. The Climate Change Committee has been clear that it does not “consider that any fossil fuel subsidies should be classed as ‘efficient’ in the UK”.
I am particularly alarmed by the announcement of the Offshore Petroleum Licensing Bill in the King’s Speech which would require the North Sea Transition Authority to run an annual process inviting applications for new production licences. Not only will this legislation fail to reduce household bills or improve energy security, it will also increase the risk of stranded assets which it is estimated could exceed $1trillion globally. As has been observed by Antonio Guterres, the UN Secretary General, “investing in new fossil fuels infrastructure is moral and economic madness”. It is vital, therefore, that this Bill be halted, that the outdated duty to maximise the economic recovery of petroleum in the North Sea be removed from the UK’s statute book, and that the Government focusses on a major investment in home energy efficiency, alongside unleashing our abundant renewables to deliver cheap, clean energy.
- Implementing a Green New Deal
The UK is suffering from years of cuts and underinvestment that have broken our public services and mean that we are now lagging far behind what is needed when it comes to climate action. A Green New Deal responds to the fact that the climate emergency is not just an environmental issue, but a social and economic one which will shape all our lives for decades to come. I hope you will recognise this when delivering your Autumn Statement and kickstart a programme of public-led investment in green projects like renewable energy, green home upgrades and nature-friendly farming, in order to create jobs in every constituency and deliver a wealth of opportunities across the UK.
As part of a Green New Deal, the Government must work to cut energy bills for the long-term and deliver the fiscal stimulus needed to drive forward a Local-Authority led, street-by-street, home energy efficiency programme. Decarbonising the UK’s homes will not only protect households from volatile gas prices, but is essential to delivering our climate targets, and the piecemeal approach which has been taken so far is vastly insufficient. According to the IPPR, a retrofitting programme in England could sustain over 400,000 direct jobs and 500,000 indirect jobs by 2030, many of which would be in in current or former industrial centres and coastal communities, thereby helping to level up the country.
A Green New Deal must be delivered alongside raising taxes on wealth and on the biggest polluters, ensuring the stability of the economy so we can invest on the scale required. The case for a wealth tax was reinforced earlier this year when UN-backed research found that the top 10% of global carbon emitters generate almost half of all greenhouse gas emissions. Furthermore, a recent report by Oxfam revealed that fair taxes on the UK’s biggest polluters – namely fossil fuel companies and the extremely wealthy – could have raised up to £23bn last year. I urge you to take the vital steps to transform our tax system when you deliver your Autumn Statement.
- Restoring our natural world
The latest State of Nature report laid bare the horrifying decline in the UK’s biodiversity – with one in six species now threatened by extinction and more than 40% of birds at risk of disappearing from our skies forever. Nature is under assault from every direction, from climate change, to pollution and our intensive agriculture system. The Government must take urgent steps to deliver on its commitments under the Environment Act and the Global Biodiversity Framework to “halt and reverse biodiversity loss”. Last week’s King’s Speech was a missed opportunity for nature and it is vital that the Autumn Statement delivers much-needed investment, including, for example, doubling the budget for nature-friendly farming, as recommended by the Wildlife and Countryside Link.
The condition of our filthy waterways is particularly alarming and last year there were almost 400,000 sewage releases in the UK according to official statistics, meaning that sewage was discharged for a staggering 2.4 million hours. However, despite this negligence for public and environmental health, private water and sewage companies paid a staggering £1.4bn in dividends in 2022. Access to water is a fundamental human right and yet for decades private companies have failed to invest in vital infrastructure, with profits pocketed by executives and shareholders. The Autumn Statement must announce a plan to bring water back into public ownership in order to improve the health of our rivers and seas and deliver the investment required to safeguard our water system for the long-term.
- Shifting to a wellbeing economy
Finally, your Autumn Statement should mark a turning point towards new measures of economic progress, breaking the UK’s addiction to endless economic growth and instead focussing on the health and wellbeing of individuals, communities and the environment. The Treasury-commissioned Dasgupta Review called for an “urgent and transformative change in how we think, act and measure economic success to protect and enhance our prosperity and the natural world”. Likewise, the Environmental Audit Committee report on Biodiversity in the UK called for alternatives to GDP to “more appropriate ways to measure economic success”.
Not only is the Government’s current economic approach fuelling the climate and biodiversity crises, but the narrow pursuit of economic growth above all else fails to meet the needs of both people and planet. It is essential, therefore, that future fiscal moments report on the economic, social, environmental indicators that determine whether people can live healthy and fulfilling lives, in addition to reporting on the OBR’s updated economic and fiscal forecast. This would follow the lead of New Zealand, home to the world’s first ever Wellbeing Budget and a finance ministry that uses a Living Standards Framework to shape all economic policy making.
I hope you will consider these proposals in full ahead of the Autumn Statement, and look forward to receiving your response on these matters.