The Autumn Budget was eagerly anticipated: Labour have laid the groundwork of a large in-year (£22bn) deficit and need to invest to address the poor state of the UK’s finances and assets.

The focus on oversight and governance of fiscal processes sought to bring comfort over the forecasts and early indications are that a Truss-style miscalculation has been avoided, with the gilt market and sterling paring back some of their earlier losses on the day.

While taxes and NHS funding grabbed the initial headlines (including £1.5bn for new hospital beds and diagnostic centres), the Labour government’s commitment to making the UK a clean energy superpower was a positive re-enforcement and worthy of some column inches. Gravis continues to believe that this presents a material opportunity for investment and growth in the UK and is needed to keep us on track with our decarbonisation commitments.

Commitments to hire 300 more planners and work with the National Energy System Operator (“NESO”) and Ofgem to accelerate grid connections are also welcome to unlocking development. A commitment to reform relevant National Policy Statements within 12 months also recognises the need for planning reform.

Other infrastructure and clean energy pledges included £8bn for carbon capture, usage and storage infrastructure, of which £3.9bn will be for 2025/2026 for the first clusters (we assume this refers to Hynet and the East Coast cluster) and includes 11 green hydrogen projects. £2.7bn has also been committed for 2025/2026 to continue the development of Sizewell C.

There was also support for four new electrolytic hydrogen projects across Scotland and Wales, £200m for electric vehicle charging infrastructure, support for port infrastructure to facilitate floating offshore wind (£134m), rollout of broadband through Project Gigabit and shared rural networks (£500m) and £125m for Great British Energy in 2025/26 (£100m of capital and £25m of establishment costs).

While the list is encouraging, it feels somewhat unambitious given the scale of investment needed to deliver on binding obligations in the UK’s sixth carbon budget and the 2030 grid decarbonisation objective. For example, £125m for GB Energy is small when compared with the c. £65bn needed to deliver on the 140 GW of installed renewable capacity (up from c. 57 GW) committed to as part of Labour’s manifesto.

In relation to core infrastructure, the Chancellor built on Labour’s manifesto commitments and announced £5bn to meet their commitment of delivering 1.5m new homes by the end of the parliament, £1.4bn to rebuild schools, and £1.2bn to deliver extra prison services.

In transport Labour have committed £1.6bn to local road maintenance, progress HS2 funding to extend Old Oak Common to Euston, upgrade the TransPennine Route Upgrade between York and Manchester, and East West Rail will connect Oxford, Milton Keynes, and Cambridge which is expected to unlock land for housing and laboratories.

The Chancellor has set out the case for using net financial debt (“NFD”) as part of the ‘Investment Rule’, targeting a reduction in NFD as a share of the economy. NFD is essentially public sector net debt, but also includes other financial liabilities and illiquid financial assets (such as equity and loans). The Government’s equity and loan investments to infrastructure projects are therefore now included in the borrowing base. We think this makes good sense where the associated assets can be valued.

In line with Labour’s manifesto commitment, it was also confirmed that the National Infrastructure Commission and Infrastructure and Projects Authority would be merged. Labour also announced the Office for Value for Money and the National Audit Office will play an important role in scrutinising capital projects.

Whilst the Budget points to further information to come, we do think this was a missed opportunity for a step-change in the narrative on infrastructure and decarbonisation investment, which remains largely unchanged.

A 10-year infrastructure strategy will be published in the spring of 2025 and a ‘Clean Power 2030 Action Plan’ has also been committed to. Both are expected to contain more detail than has been provided in the Autumn Budget on how Labour’s commitment to decarbonise the electricity grid by 2030, and support wider infrastructure deployment, will be achieved.

What is positive is that there does not appear to have been a winding back on Labour’s position of putting the UK energy transition second only to economic growth. Infrastructure and Net Zero form two of the seven ‘pillars’ identified to support the Growth Mission and are recognised as enablers of others.

There was, however, no material change in the pace and level of support that we consider is needed to achieve the stated ambitions. This may materialise in the coming months. If it does not, those ambitions are looking increasingly unlikely to be achievable.

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