Budget 2023: Chancellor backs nuclear and carbon capture in ‘energy reset’ – but leaves ‘glaring gaps’ in onshore wind, creaking grid, home insulation
The chancellor today skirted round contentious topics like onshore wind and home insulation in his budget, but did promise cash for nuclear power, carbon capture and energy bills.
The underlying commitment to net zero and clean energy were generally welcomed.
But campaigners have accused Jeremy Hunt of prioritising risky, “fanciful” technologies – such as machines that suck up carbon dioxide and bury it underground – over proven, but politically difficult, climate policies like boosting onshore renewables.
There is also widespread concern the budget does little to compete with the hundreds of billions unveiled by the US and EU to stimulate green growth investment, risking the UK falling behind in the “green industrial revolution”.
Nuclear reaction
A key announcement was that nuclear is to be classed as “environmentally sustainable”, subject to consultation, in a bid to pull in investment in the same way enjoyed by renewable energy.
Nuclear is costly and lengthy to build but provides reliable power without the pollution.
Government climate advisers say some nuclear power is vital to the UK’s clean energy future.
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£20bn allocated to Carbon Capture Storage
But the chancellor was criticised for rehashing old pledges.
He gleefully announced Great British Nuclear, an agency designed to revive the nuclear industry – but this has been promised before.
“The chancellor’s words on nuclear give a positive message, but it’s more like a ‘greatest hits’ compilation from the past, rather than anything new,” said Professor Adrian Bull, BNFL chair in Nuclear Energy and Society at the Dalton Nuclear Institute at Manchester University.
The government also announced a competition for mini reactors known as “small modular reactors (SMRs)”, which are not yet widely available.
If this young technology is “demonstrated to be viable” the government will “co-fund this exciting new technology”, the chancellor said.
This too resembles a previous announcement. In 2015 then-chancellor George Osborne launched a competition to identify the best design and get one built in the 2020s – a target yet to be hit.
Chris Stark, chief executive of the government’s climate advisors the Climate Change Committee (CCC), said nuclear seems to “have been announced and re-announced so many times”.
“SMRs [sic] would be useful if they are delivered as quickly as promised. Whether they will be though…” he wrote on Twitter.
Carbon capture, utilisation and storage
Another leap of faith, on top of the push for SMRs, is the push on carbon capture, utilisation and storage (CCUS).
It is an expensive technology, still in its infancy.
But the UK cannot afford to bypass CCUS, climate advisers said last week, because it is not cutting emissions enough.
Today the government pledged £20bn towards the technology in order to “increase resilience to future energy price shocks” – suggesting it would primarily be used to allow the UK to burn more gas, rather than to capture emissions from factories, for example.
Dr Steve Smith from Oxford University’s Smith School of Enterprise and the Environment said the funding was “good news” but needs extra policy decisions from government to become viable.
Some campaigners warn the UK is using it as an excuse not to cut emissions.
“Locking in reliance on gas power will increase our vulnerability to future energy price shocks, while adding in the additional costs, risks and uncertainty of trying to capture emissions from gas power plants,” said Alethea Warrington, senior campaigner at climate charity Possible.
“Including carbon capture will add even more costs, while being unproven to actually work and putting our climate, as well as our finances, at risk.”
Meanwhile Greenpeace called the £20bn over 20 years “frankly pathetic compared to the green growth investments being made in the US, EU and China”.
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Tom Heap investigates hydrogen’s role in the future of heating UK homes.
Capital expensing – and can the UK rival the US and EU’s mega green growth packages?
Sam Hall, director of the Conservative Environment Network, said today’s measures do bring the country closer to net zero.
He welcomed the announcement of full capital expensing for the next three years, saying it would help attract more investment in renewables and the supply chain. This should please the offshore wind sector.
“But with the USA and EU offering enormous green subsidies, the UK needs to up its game” to remain an attractive place to invest in wind and solar, as well as the next generation of clean industries like sustainable aviation fuel and green hydrogen, added Mr Hall.
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Experts are warning of the risk to rivers following the driest February for 30 years.
But the government will be talking more about net zero before the end of the month – the deadline by which it has to respond to a legal ruling on its net zero strategy.
The courts found the government’s net zero strategy was unlawful because it failed to outline how climate policies would meet legally binding carbon budgets – forcing ministers to rework their plans.
‘Zero mention of renewables’
Many were disappointed that the chancellor steered clear of lifting a de facto ban on onshore wind.
Antony Froggatt, of thinktank Chatham House’s Environment and Society Programme, said: “In the UK Budget there is zero mention of renewables and only £105m set aside for community supported energy efficiency compared to £235m funding for potholes.”
Onshore wind is politically contentious, with recent governments changing their minds on it.
Meanwhile, the EU and US are “rolling up their sleeves and supporting the domestic production of electric vehicles, solar panels and wind turbines, that will bring jobs now and make a difference in the 2020s”, said Mr Froggatt.
He warned the chancellor to “be careful the UK isn’t left at the starting line of this new and more competitive low carbon race.”
Friends of the Earth criticised the “glaring gap” in the budget on onshore wind and home insulation.
Energy bill help a ‘sticking plaster’ compared with home insulation
Good news amid the cost of living crisis came in the form of a decision to extend the energy price guarantee, which caps average household bills at £2,500, for a further three months to June.
It had been due to rise to £3,000 in April and the cost of scrapping the planned 20% increase will amount to around £3bn.
However, the chancellor stopped short of new commitments on home insulation, which advocates say would bring down household bills permanently.
In his autumn statement Hunt did pledge £6.6bn during this parliament for energy efficiency, and a further £6bn from 2025. But energy groups say £6bn a year is needed to upgrade leaky homes and promote heat pumps.
Insulation rates were over 90% higher in the 2000 and 2010s to 2013, at which point the Cameron administration “cut the green crap”, according to thinktank ECIU.
Jo-Jo Hubbard, CEO of network optimisation specialist Electron, called the energy bill support a “sticking plaster” that is “about to wash off.”
Upgrade the grid!
Instead the government should upgrade Britain’s outdated electricity network, added Ms Hubbard, one of many in the industry warning of the problems it is creating.
At the moment consumers are paying for wind to be switched off when the grid can’t handle the capacity. New power capacity is also waiting to be connected, said Ms Hubbard.
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Business
MPs to debate emergency law to keep British Steel open as prime minister warns national security ‘on the line’
MPs will today debate emergency laws to save British Steel after the prime minister warned the country’s “economic and national security is on the line”.
Sir Keir Starmer said the future of the company’s Scunthorpe plant – which employs about 3,500 people – “hangs in the balance” after its owner said the cost of running it was unsustainable.
The prime minister said legislation would be passed in one day to allow the government to “take control of the plant and preserve all viable options”.
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MPs and Lords are being summoned from their Easter recess to debate the move and will sit from 11am.
The last time parliament was recalled was on 18 August 2021 to debate the situation in Afghanistan.
The government has been considering nationalising British Steel after Jingye, the Chinese owner, cancelled future orders for iron ore, coal and other raw materials needed to keep the blast furnaces running.
The furnaces are the last in the UK capable of making virgin steel.
Jingye last month rejected a £500m state rescue package – raising fresh doubts about the Lincolnshire plant and fears it could close in the coming days.
The steel from the plant is used in the rail network and the construction and automotive industries. Without it, Britain would be reliant on imports at a time of trade wars and geopolitical instability.
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Inside the UK’s last blast furnaces
In a statement on Friday, Sir Keir said: “I will always act in the national interest to protect British jobs and British workers.
“This afternoon, the future of British Steel hangs in the balance. Jobs, investment, growth, our economic and national security are all on the line.”
The prime minister said steel was “part of our national story, part of the pride and heritage of this nation” and “essential for our future”.
He said the emergency law would give the business secretary powers to do “everything possible to stop the closure of these blast furnaces”.
This includes the power to direct the company’s board and workforce. It will also ensure it can order the raw materials to keep the furnaces running and ensure staff are paid.
The Scunthorpe plant is the last in the UK that can make virgin steel. Pic: Reuters
One of the two blast furnaces at Scunthorpe
Chancellor Rachel Reeves said the government was “taking action to save British steel production and protect British jobs”, while Business Secretary Jonathan Reynolds said the owner had left the government with “no choice”.
Mr Reynolds said Jingye had confirmed plans to close the Scunthorpe furnaces immediately despite months of talks and the offer of £500m of co-investment.
The company said it had invested £1.2bn since taking over in 2020, but that the plant is losing £700,000 a day.
Read more:
Govt intervention in British Steel ‘a remarkable step’ – analysis
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What will happen with British Steel?
Conservative leader Kemi Badenoch said the government had landed itself in a “steel crisis entirely of their own making”.
She said when she was business secretary, she had negotiated a plan with British Steel “to limit job losses and keep the plant running”.
Ms Badenoch said the government had “bungled the negotiations, insisting on a Scunthorpe-only deal that the company has deemed unviable”.
She added: “Keir Starmer should have seen this coming. But instead of addressing it earlier in the week when parliament was sitting, their incompetence has led to a last-minute recall of parliament.”
The Unite union said the prime minister’s recalling of parliament was “absolutely the right thing to do to begin the process of nationalisation”.
While the government hasn’t confirmed those plans, the chancellor also said earlier this week that “all options” are on the table.
Sky News understands accountancy firm EY is being lined up to play a role in a nationalisation process.
The government’s intervention over British Steel comes six months after the last blast furnace was closed at Port Talbot in Wales.
Plaid Cymru has questioned why the government didn’t take similar action there.
The party’s Westminster leader, Liz Saville Roberts, said: “Parliament is being recalled to debate the nationalisation of Scunthorpe steelworks.
“But when global market forces devastated Welsh livelihoods in Port Talbot, Labour dismissed Plaid Cymru’s calls for nationalisation as ‘pipe dreams’.”
Business
MPs to debate emergency legislation to keep British Steel open as ‘security is on the line’
Sir Keir Starmer has said the government will debate emergency legislation on Saturday to keep the British Steel plant in Scunthorpe open as “our economic and national security is on the line”.
The prime minister added that “the future of British Steel hangs in the balance” and legislation will be passed tomorrow to allow the government to “take control of the plant and preserve all viable options” for it.
MPs and Lords are being summoned back from Easter recess to Westminster to debate draft legislation on the plans, and will sit from 11am on Saturday.
The government had been actively considering nationalising British Steel after Jingye, its Chinese owner in Scunthorpe, cancelled future orders for the iron ore, coal and other raw materials needed to keep the last blast furnaces in the UK running.
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Jingye also rejected a £500m state rescue package in a move which raised fresh doubts about the 3,500 jobs at the Lincolnshire plant – with it feared the site would be forced to close as early as next week.
The steel from the plant is used in the rail network and the construction and automotive industries. Without the plant, Britain would be reliant on imports at a time of trade wars and geopolitical instability.
In a short statement delivered from Downing Street this evening, Sir Keir said: “I will always act in the national interest to protect British jobs and British workers.
“This afternoon, the future of British Steel hangs in the balance.
“Jobs, investment, growth, our economic and national security are all on the line.”
One of the two blast furnaces at British Steel’s Scunthorpe operation
‘A new era of global instability’
The prime minister added he has been to the site in Scunthorpe and met the steelworkers there.
He said he understands how “important steel is” to the “whole country” and continued: “It’s part of our national story, Part of the pride and heritage of this nation.
“And I’ll tell you this, it is essential for our future.
“[The government’s] plan for change means we need more steel, not less. So we will act with urgency… This situation and our response is unique.
“While it is true that we’re facing a new era of global instability, our concerns about this plant and negotiations to protect it have been running for years.”
Sir Keir said parliament will be recalled for a “Saturday sitting” and will “pass emergency legislation” in “one day” to give the business secretary the powers to do “everything possible to stop the closure of these blast furnaces”.
He added: “We will keep all options on the table. Our future is in our hands.”
Chancellor Rachel Reeves posted on X after the statement that the government is “taking action to save British steel production and protect British jobs”.
“We are securing Britain’s future,” she added.
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Inside the UK’s last blast furnaces
Tory leader criticises Starmer
Business Secretary Jonathan Reynolds said this evening the Chinese owner of British steel has left the government with “no choice” but to act.
Jingye had confirmed plans to close the blast furnaces at Scunthorpe immediately despite months of talks and the offer of £500m of co-investment from the UK government, Mr Reynolds added in a statement.
It came as Conservative leader Kemi Badenoch said the government has landed itself in a “steel crisis entirely of their own making”.
“As business secretary, I negotiated a modernisation plan with British Steel to limit job losses and keep the plant running, including introducing an electric arc furnace in Teesside, similar to what we did with Tata at Port Talbot steelworks.
“However, the union-led Labour government have bungled the negotiations, insisting on a Scunthorpe-only deal that the company has deemed unviable. Keir Starmer should have seen this coming. But instead of addressing it earlier in the week when parliament was sitting, their incompetence has led to a last-minute recall of parliament.”
She added the government’s attempts to find a solution to the crisis are inevitably “going to cost taxpayers a lot of money”.
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British Steel’s Scunthorpe plant.
Pic Reuters
Meanwhile, the Unite union welcomed Sir Keir’s announcement by saying it is “absolutely the right thing to do to begin the process of nationalisation”.
The government has not confirmed plans to nationalise the company, but like the prime minister this evening, Chancellor Rachel Reeves said earlier this week that “all options” are on the table.
Unite general secretary Sharon Graham said this evening: “I am pleased that the government has listened to representations by Unite and other steel unions over the future of British Steel.
“Ministers could not have allowed a foundation industry to go under with the loss of more than 3,000 jobs and key skills… Discussions have been positive and whilst a longer-term plan needs to be developed, this gives workers the reprieve we have been asking for.”
‘When it was Wales, they mocked’
The government’s intervention over British Steel comes six months after the last blast furnace was closed at Port Talbot in Wales.
Welsh political party Plaid Cymru has questioned why the government did not take similar action to save that steelworks.
The party’s Westminster leader Liz Saville Roberts MP said: “Parliament is being recalled [on Saturday] to debate the nationalisation of Scunthorpe steelworks.
“But when global market forces devastated Welsh livelihoods in Port Talbot, Labour dismissed Plaid Cymru’s calls for nationalisation as ‘pipe dreams’.
“In a real emergency, governments step up to defend their strategic interests. Plaid Cymru recognised the importance of Welsh steelmaking. Labour chose to look the other way.
“When it was Wales, they mocked. Now it’s England, they act.
“Labour has taken Wales for granted for far too long – and the people of Wales won’t forget it.”
The economy performed better than expected in February, growing by 0.5% according to official figures released on Friday, but comes ahead of an expected hit from the global trade war.
The standard measure of an economy’s value, gross domestic product (GDP), rose in part thanks to a suprisingly strong performance from the manufacturing sector, data from the Office for National Statistics (ONS) suggested.
Following the publication of the figures, the British pound rose against the dollar, jumping 0.4% against the greenback to $1.3019 within an hour.
Analysts had been forecasting just a 0.1% GDP hike in the lead-up to the announcement, according to data from LSEG.
Chancellor of the Exchequer Rachel Reeves described the results as “encouraging”, but struck a cautious tone when alluding to US President Donald Trump’s tariffs, and the economic volatility of the past week.
“The world has changed, and we have witnessed that change in recent weeks,” she said.
“I know this is an anxious time for families who are worried about the cost of living and British businesses who are worried about what this change means for them,” Ms Reeves added. “This government will remain pragmatic and cool-headed as we seek to secure the best deal with the United States that is in our national interest.”
But back in February, when Mr Trump was just beginning his second term in office, the UK’s economy looked to be on firmer ground.
Service sectors like computer programming, telecoms and car dealerships all had strong a month, while manufacturing industries such as electronics and pharmaceuticals also helped to drive GDP growth in February.
Car manufacturing also picked up after its recent poor performance.
“The economy grew strongly in February with widespread growth across both services and manufacturing industries,” said Liz McKeown, ONS Director of Economic Statistics.
While motor vehicle manufacturing and retail both grew in February 2025, they remain below February 2024 levels by 10.1% and 1.1% respectively
This aligns with industry data showing year-on-year declines in registrations and manufacturing.
“The UK economy expanded by 0.5% in February, surprising but welcome positive news,” said Hailey Low, Associate Economist at the National Institute of Economic and Social Research.
“However, heightened global uncertainty and escalating trade tensions mean the outlook remains uncertain, with a likely reduced growth rate this year due to President Trump’s “Liberation Day” announcements.”
Ms Low said that this could create a dilemma for Ms Reeves, who would face difficult decisions later in the year when the chancellor presents her next budget.
The latest data also shows a jump from January, when the economy was flat. And compared to the same month a year ago, GDP was 1.4% higher in February 2025.
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