Osborne targets fuel duty and infrastructure

In addition, theChancellor unveiled a new model to replace the Private Finance Initiative (PFI) for financing public infrastructure,known as PF2.This was welcomed by waste management firm Veolia Environmental Services, although the extent of its impact on the waste management sector is still to be determined.

However, commentators were quick to criticise the Autumn Statement for doing little toboost the green economy or the waste management sector.

Addressing the House of Commons, Mr Osborne insisted that the British economy was healing despite being on course to misshis target for reducing national debt and being forced to extend austerity measures to 2018.

Infrastructure

On infrastructure,the Chancellor published an update to the government’s National Infrastructure Plan alongside the Autumn Statement. The updatesets outout progress in delivering waste infrastructure since the plan was issued in 2011. Thisincludesthe approval of four local authority waste contracts, increasing landfill tax to 64 a tonne in 2012/13, the setting up of the AD loan fund and the establishment of the Green Investment Bank in October 2012.

The updatealso explains that in order to make further progress, the government intends to issue a Hazardous Waste National Policy Statement in 2013 and publish a National Waste Management Plan in 2013.

PF2

On PFI,Mr Osborne said that PF2 wouldprovide a new way of providingprivate finance in the delivery of public infrastructure and services.

PF2 is intended to speed up and reduce the costs of the procurement process for new facilities, which is something which PFI has often been criticised for. It is also intended to provide greater flexibility in the provision of services. It also seeks to provide access to wider sources of equity and debt finance to improve the value for money of financing projects and to increase the transparency of the liabilities created by long term projects and the equity returns.

Mr Osborne said: We have today published full details of the replacement for the discredited PFI. Since we can all see now that the public sector was sharing the risk, we will now ensure we also share in the reward.

Commenting on this, Robert Hunt, executive director for Veolia ES, said: “Veolia welcomes the Governments statement today with regard to the new PFI model. Veolia believes that the Private sector investment in waste infrastructure has already delivered significant benefits both with regard to landfill diversion, job creation and creation of vital waste infrastructure already. Clearly we will wish to study the detail of the new proposals but the injection of additional equity and facility for better financing is clearly to be welcomed.

With regard to the comments with regard to closed projects at all times Veolia is in dialogue with its key PFI clients with a view to ensuring best value at all time whilst obviously respecting the economic integers of the original investment.

Fuel

In a move which is likely to be welcomed by businesses and consumers alike, the Chancellor also scrapped a planned 3p rise in fuel duty, which was due to come into place in January. This is of significance to waste management companies with large fleets.

He said: There will be no 3 pence fuel tax rise this January. That is real help with the cost of living for families as they fill up their cars across the country. And it will help businesses too.

Various other measures to help businesses, including those in the waste and recycling sector, were also announced.

These include:

• Increasing the Annual Investment Allowance for SMEs to spend on plant and machinery for two years from January 2013. Instead of 25,000 worth of investment being eligible for 100% relief, 250,000 worth of investment will now qualify. Mr Osborne said: It is a huge boost to all those who run a business, who aspire to grow and expand and create jobs.

• A planned consultation on allowing investment in SME equity markets like AIM to be held directly in stocks and shares ISAs, to encourage investment in growing businesses.
• A further extension in the the temporary doubling of the Small Business Rate relief scheme to April 2014.

Concluding his speech, Mr Osborne said: In everything we do, were helping those who want to work hard and get on.

Reaction

Initial reaction to the Autumn Statement came from the Resource Association, which represents material reprocessors and said that the waste and resource industry had been overlooked.

Chief executive Ray Georgeson said: For our sector there was little pre-Christmas cheer in the Chancellors Autumn Statement. The waste and resources industry must have been very naughty this year as Santa George Osborne does not appear to have answered any of our letters urging him to give the green economy a real boost and recognise its potential in taking the UK sustainably out of recession.

The constraints on the Green Investment Bank remain in place and so his forecasts for deficit reduction mean the GIB remains unable to borrow until 2016/17, assuming his forecasts prove accurate. The absence of a focused manufacturing strategy to support UK green industries, together with the weak signals on renewables allied to boosts for fossil fuel based economic activity send a bleak message to green investors.This is frustrating, as we know that investors will respond to clear and strong signals from Government. The Chancellors tin ear on the potential for the green economy appears to be intact.