Budget 2021 sustainability measures

The “Green Revolution” is seen as key to rebuilding the UK post Covid. There were a number of announcements made to re-affirm the commitment to greater sustainability.

The pandemic has understandably forced the Chancellor to look predominantly short-term, but it is pleasing to see that the longer-term commitments to tackle climate change and social inequality have not been neglected. There may be questions raised about how much further the Government could go to support the “Green Revolution” but the Chancellor has made it clear that business will be expected to support the government’s sustainability and social equity agenda going forward.

So, what was announced and what can UK businesses do to go “green”?


  • The £375 million UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies such as those working in life sciences, quantum computing, or cleantech, that are aiming to raise at least £20 million of funding.
  • £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators and help support the government’s aim to generate enough electricity from offshore wind to power every home by 2030.
  • £68 million to fund a UK-wide competition to deliver first-of-a-kind long-duration energy storage prototypes that will reduce the cost of achieving net-zero by storing excess low carbon energy over longer periods.
  • £4 million for a biomass feedstocks programme in the UK to identify ways to increase the production of green energy crops and forest products that can be used for energy.
  • Over £1 billion funding for a further 45 towns in England through the Towns Fund, supporting their long-term economic and social regeneration as well as their immediate recovery from the impacts of Covid-19.
  • Plans for at least £15 billion of green gilt issuance in the coming financial year, to help finance critical projects to tackle climate change and other environmental challenges, fund important infrastructure investment, and create green jobs across the UK.
  • £27 million in the Aberdeen Energy Transition Zone and £5 million in the Global Underwater Hub in Scotland, the first stage in delivering the North Sea Transition Deal.
  • £4.8 million to support the development of a demonstration hydrogen hub in Holyhead, Anglesey.


  • The remit of the Bank of England will change to include a duty to support the move towards near zero emissions.
  • UK Infrastructure Bank:  the Chancellor announced that the new UK Infrastructure Bank would be based in Leeds and capitalised to the tune of £12 billion (£5billion equity and up to £7 billion debt from either the DMO or private markets), aiming to create a stimulus of £40bn in investment overall.
  •  A Green Retail Savings product for retail investors through NS&I will launch in the summer of 2021. This will be closely linked to the sovereign green bond framework. It is aimed at giving UK savers the opportunity to help support and tackle climate change, benefiting from the innovative reporting standards announced for the green gilt issuance programme.


  • The plastic packaging tax is a new tax that will apply to plastic packaging manufactured in, or imported into the UK, that does not contain at least 30% recycled plastic. The tax will be effective from 1 April 2022 and is aimed at encouraging businesses to use recycled material in the manufacture of plastic packaging.
  • The introduction of a “Super Deduction” for capital investment may well integrate with “green” and net zero carbon thinking, though there is no indication that the deduction is dependent on meeting green criteria.
  • The electric company car Benefit in Kind tax rate will increase to 1% from April 2021/22, meaning it will no longer be a nil benefit in kind.

Reward Strategy

  • An immediate consideration, with changing working environments being introduced due to the impact Covid-19 has had on the economy and society, is for employers to enhance and review their reward strategies. Integrating sustainability into reward offerings will be important in attracting talent, reducing costs, and making rewards more efficient for all.
  • This may include electric cars and bicycles (given their potential low/exempt tax rates), travel expense policies, home working allowances and home energy support incentives. Employers, therefore, have an opportunity to think beyond normal reward programmes to transform their approach and enhance retention and recruitment, as well as continue to manage costs.
  • With no announcement regarding the rollover of funds from the Green Homes Grant, employers have a chance to think about how home energy costs can be integrated into reward strategies, particularly with more employees working from home.

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