PwC comments on the King's Speech - Energy, planning and infrastructure

Vicky Parker, Head of Power and Utilities at PwC UK, comments on the Great British Energy Bill:

“The policy direction of the new Government suggests we are likely to see a growing involvement of the public sector to help drive progress in energy. The announcement of Great British Energy today and a focus on creating a clean energy superpower, being a welcome example of that to accelerate progress to zero carbon by 2030. The success of these institutions is likely to be measured against the amount of private capital they mobilise, how GBE becomes an active participant in the sector, the introduction of electricity market reforms and their ability to deliver new infrastructure in the UK. Demonstrating results will be essential to deliver on energy security and affordability promises, but the focus today needs to be on deliverability: unlocking blockers, investment in skills, supply chains and greater prioritisation to allow for capital and efforts to be focused, all of which will no doubt be looked at by the newly established 'Mission Control' as part of their focus towards 2030 targets.

“To accelerate plans for the UK to meet Net Zero, significant investment is required across established solutions, such as wind, as well as less mature solutions such as hydrogen, heat pumps and sustainable aviation fuels. The newly-formed National Wealth Fund’s task force, which has been allocated £7.3bn of capital, will focus on investments such as green hydrogen and steel, industrial decarbonisation, ports and gigafactories. There will still be a gap between what is needed and what the market is currently providing, so a step-up is needed across a wide range of different investor types, as no single solution or institution will provide the full suite of financing which is required.

“In order to meet the accelerated 2030 targets and demonstrate tangible results, there also needs to be a focus on ramping up the pace of the installation of new, low-carbon infrastructure (generation as well as connection) and tackling long-standing blockers such as planning and financing. Removing planning restrictions and simplifying application processes can unlock offshore wind and accelerate onshore wind development, for example, the latter of which the government has already acted on.” 

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James Bailey, Housing Leader at PwC UK, comments on the Planning and Infrastructure Bill:

“The new Labour Government is right to place a key focus on addressing housing supply, and streamlining planning is an important part of solving the challenge. The return of housing targets will hold reforms to account and evaluate their success in boosting growth. While focus on new supply will receive the headlines, it's also encouraging that the government is seeking to bring forward the Renters Reform Bill at pace.

“However, if we want to reach 300,000 homes per year, then more detail is going to be required to give the market the confidence to respond and invest. Firstly, we need more available land in the market, in addition to increasing the supplier base - creating the conditions to grow the contribution from SMEs and public sector partners while continuing to grow the output from volume housebuilders. More mixed-tenure models - particularly social, affordable and private rental - are vital in ensuring new supply lines are suited to varying socioeconomic conditions. It is important that mixed-tenure supply does not cannibalise the important build-for-sale market, and is positioned so it can effectively tap into private capital looking for long-term investment opportunities. 

“Targets and policy reforms will only work if there are enough talented professionals entering and staying in construction sectors, so a focus on productivity and closing the labour and skills gaps will be pivotal. In PwC’s recent Framework for Growth research, 54% of construction businesses chose skills, education and talent among their top three most important factors for growth.

“One area not discussed in today's speech is how we also facilitate the much-needed investment into improving existing housing stock. We have some of the oldest, coldest and dampest homes in Europe and significant investment is required to bring them up to a decent level. Retrofitting at scale could bring tangible benefits such as reducing energy bills and fuel poverty at a time of cost of living pressures, not forgetting addressing health concerns in relation to old properties which have not yet been modernised.”