The government has confirmed it is maintaining the cap on Carbon Price Support rates and pledged investment for electric cars, innovation and infrastructure.
Philip Hammond made the announcement during his first and last Autumn Statement as Chancellor as he revealed it will be abolished.
That means following the spring 2017 Budget and Finance Bill, budgets will be delivered in the autumn, with the first one taking place in autumn 2017.
The announcements were part of the first major economic statement since the Brexit vote earlier this year.
Carbon Price Support and fuel duty
The carbon emissions tax levied on power producers will be capped at £18t/CO2 until 2020/21 “to provide certainty to businesses”. The government will consider the appropriate mechanism for determining the carbon price in the 2020s.
The government has also pledged to implement the business rates reduction package worth £6.7 billion.
The fuel duty will remain frozen for the seventh successive year – at a cost of £850 million and is expected to save the average car driver £130 and van driver £350 annually.
The news comes despite campaigners calling for a price reduction rather than a freeze.
EVs and ultra-low emission vehicles
The Chancellor pledged to invest a further £390 million by 2020/21 to support ultra-low emissions vehicles (ULEVs), renewable fuels and connected and autonomous vehicles (CAVs).
That includes £80 million for ULEV charging infrastructure, £150 million for low emission buses and taxis, £20 million for the development of alternative aviation and heavy goods vehicle fuels and £100 million for new CAV testing infrastructure.
In addition, the government will also offer 100% first-year allowances to companies investing in electric vehicle charging points until the end of March 2019.
Innovation and infrastructure
Mr Hammond said the government will prioritise additional “high-value” investment, specifically infrastructure and innovation, “that will directly contribute to raising Britain’s productivity”.
A new National Productivity Investment Fund of £23 billion will be spent on infrastructure and innovation in the next five years.
He also reiterated Prime Minister Theresa May’s announcement this week of additional investment in research and development, which will increase to an extra £2 billion per year by 2020/21.
The Chancellor announced a significant increase in infrastructure spending for Scotland, Wales and Northern Ireland: £800 million, £400 million and £250 million respectively. Around £1.8 billion from the Local Growth Fund will be invested in English regions.
The government expects the private sector to invest more than £100 billion in the UK’s energy industry in the next 15 years, providing new cleaner generating capacity, upgrading to a smarter energy system and developing new resources such as shale.
The move to a single fiscal event will be made after the spring Budget in 2017. There will be a second Budget before the end of 2017 to switch to the new timetable, which will then be followed in future years.