Nearly one month on from The Budget 2016, our experts look into the finer details and reveal what it actually means for Cumbria.

Experts Craig Hatch and Simon Sjenitzer from Cockermouth consultancy, WYG, reflect on the impact of the Budget for infrastructure and energy sector in Cumbria. 

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Both Craig and Simon are based WYG’s Cockermouth office and witnessed the floods first hand last winter.

Insurance premium rise

Commenting on the 0.5 per cent rise in insurance premium tax to create an additional fund for flood, Simon said: “Tax increases are never welcome, but living in Northern England and having experienced the devastation (which persists still today) that that the floods created in places like Cumbria and Yorkshire, we need to get real with our ability to engineer solutions that protect our houses, businesses and infrastructure.

"With an increased expectation of Climate Change related severe weather incidences, we must make sure that this hypothecated fund is spent wisely and fully.” He voiced concerns over the Budget’s contribution to combating climate change, at a time when record breaking high winter temperatures have been recorded in the Arctic. 

Infrastructure

Craig welcomed the additional commitment of funds to enable key infrastructure repairs to bridges and roads to reconnect affected communities. On transport, he added that “the A66 and A69 road improvements investment announced will help connectivity for Cumbria as the engine room for the Northern Powerhouse. The continued commitment for the significant improvements in the transport links in the north is well received.” 

Asset management

As an asset management specialist, Craig picked up on the Chancellor’s stated view that the world is a more uncertain place than at any time since the start of the financial crisis, leading to his announcement to cut 50p in every £100. “The translates effectively to £2 for government departments and local authorities to find once protected budgets are taken into account,” he pointed out, “this proposition emphasises the importance of effective asset management for these bodies, which can be effectively driven in two ways: firstly, by strategic thinking to maximise capital receipts from asset portfolios; and secondly by an effective risk based approach to minimise revenue spend in maintaining assets.” 

Energy

For the energy sector, Simon highlighted that “the announcement that the government will auction Contracts for Difference of up to £730 million this Parliament for up to 4 GigaWatts of offshore wind and other less established renewables is welcome.” He also backed the Budget’s continued support of small modular nuclear reactors (SMRs) as a low carbon technology to potentially be used in the UK. Such reactors should be cheaper and quicker to build than their larger-scale cousins, which would be a distinct advantage given the well publicised funding and programme challenges being experienced with the latter. 

Deplorable cuts

Finally, he deplored the lack of assistance for the onshore wind industry which has been hit by recent cuts in support, despite offering a proven, cost-effective and rapid means of increasing the country’s renewable energy supply. Other levers are outside the Government’s hands, as taxation on the solar industry, which is reducing competitiveness, is imposed through the EU. 

Both agreed that the Government’s promised action around tax relief for decommissioning of oil and gas assets is to be welcomed as there is much work to be done in that area to minimise environmental risk. “However, the issue is not just restricted to the oil and gas sector, with significant requirements on the immediate horizon for decommissioning of coal fired power stations and other energy-related infrastructure,” Simon stressed, “As well as being an environmental liability many of these sites actually have great potential for remediation and re-use, and WYG is working with a number of clients in the sector to achieve these benefits.” 

Craig Hatch is Head of Asset Management and leads WYG’s Britain’s Energy Coast strategy. Simon Sjenitzer is Associate Director for Energy & Climate Change Business Development.