Green Deal Pending

So it was no surprise that green issues got little more than a passing mention in a budget speech which focussed on headline grabbing increases in VAT and capital gains tax, and spending cuts.

That said, it was a little disappointing not to at least see the reform of aviation tax from a per-passenger to a per-plane duty, given its prominence in the election manifestos of both coalition partners. But this was skated over by the Chancellor, with detailed proposals promised for a consultation in the Autumn.

And there was a mere passing reference to the planned Green Investment Bank, with no detail. That will disappoint those who are waiting to see how the bank will be structured, and with what remit. What we're all waiting for is confirmation that this public money will not compete with private equity, but will instead bridge the funding gap by supporting growth companies in their early stages to help them bring their green products and services to market.

Other anticipated green measures failed to materialise. Notably there were no further clues as to how the government will introduce a floor price on carbon, something many argue is essential if businesses are to be encouraged to make the necessary long term investments in new low carbon infrastructure.

The decision to forgo any increase in fuel duty will also no doubt enrage environmentalists, although there were some new capital allowances for businesses buying new emissions-free commercial vehicles.

On the positive side, capital investment plans for some critical low carbon infrastructure looks set to be protected, notably a series of rail upgrades, extended metro schemes and the upgrade to New Street station.

Elsewhere, clean tech growth companies may benefit from the lower rate of corporation tax paid by smaller businesses, and in the package of capital gains tax measures green entrepreneurs will benefit from a massive increase in the relief limit to £5m.

But despite all of this, it's hard not to worry that the government is taking its eye off one of its balls. Yes, the deficit needs to be tackled. But the big challenge that our government faces is to perform a juggling act by driving down the deficit at the same time as nurturing the transition to a green economy.

Last week the government cancelled an £80m loan to Sheffield Forgemasters, intended to support the development of a new manufacturing facility for components to support the nuclear supply chain. At the other end of the spectrum, unspent funds in the Low Carbon Building Programme available to support installation of renewable heat technologies were curtailed early, a full 10 months ahead of the introduction of the new renewable heat subsidy next year.

Perhaps a sign of reshaped priorities? We should hope not. This new coalition government has a lot on its plate, and a focus this week on the deficit is understandable. But time is short, and we must now wait until the Autumn for the promised series of low carbon policy announcements needed to herald a green new deal for business. That's when we'll discover if this government is serious in its ambition to be the "greenest government ever".