Chancellor Alistair Darling has pledged to extend the Renewables Obligation of financial support until 2037 in his pre-budget statement.

The Renewables Obligation was introduced in 2002 and legally requires UK electricity suppliers to source a percentage of their power from renewable energy. The system was due to be in place until 2027, however the Chancellor has extended this by a further 10 years.

Maria McCaffery, British Wind Energy Association (BWEA) Chief Executive said: “BWEA has been for some time now asking the Government to reiterate its commitment to the Renewables Obligation beyond 2027. If we have Round 3 projects coming on line from 2015, under the previous regime they would have been covered by the RO for only the first half of their projected life cycle. This extension to the RO will bring long term stability and encourage developers to continue with the building programme.”

The chancellor also announced that £535m in capital spending would be brought forward to sustain 350,000 jobs in the low carbon sector, and that insulation measures would be installed through the £6.8bn Home Energy Saving Programme which will help households save up to £300 per annum on energy bills and reduce carbon emissions.

How the government's emergency measures to tackle the downturn will affect the M&E sector

The pre-Budget report measures affecting the construction industry in full:

Capital spending

£3bn of capital spending will be brought forward from 2010/11 to 2008/9 and 2009/10. The money will be used to:

  • Increase capacity in the motorway network;
  • Improve and build new social housing;
  • Renew primary and secondary schools;
  • Invest in energy efficiency measures.

Empty properties tax relief

Temporary increase in the threshold for empty property relief. For 2009/10, empty commercial properties with a rateable value below £15 000 will be exempt from business rates. This exemption covers an estimated 70% of all empty properties.


  • An additional £100m and another £50m brought forward to help up to 60 000 more households insulate their homes.
  • The government will invest £535m more quickly on energy efficiency, rail transport and environmental protection.

Housing and mortgage lending

Package of support for housing worth a total of £1.8bn, including:

  • An additional £775m this year and next to invest in thousands of new and modernised social housing and regeneration projects.
  • Darling to work up plans for a £100bn scheme to provide government guarantees for banks new mortgage lending, in line with the recommendations of the Crosby report published today. Darling said he would seek State Aid approval from the European Commission to implement the measure and report back at the time of the budget. However, it was not immediately clear where the money would come from.
  • Major lenders have agreed that, where someone is facing repayment difficulties with their home mortgage, they will wait at least three months after the borrower falls into arrears before initiating repossession proceedings.
  • £15m of new funding for free debt advice, available to everyone, regardless of circumstances, available across the country.
  • The Support for Mortgage Interest scheme which covers mortgage interest payments for those who have lost their jobs will have upper limit increased to cover mortgages up to £200 000, from the present limit of £100 000. For six months, the level of interest rates covered by the scheme will remain at just over 6%.


£7bn package of measures, including:

  • Government is also to offer £1bn of credit through a temporary Small Business Finance Scheme. Will cover sums from £1000 to £1m at more flexible terms.
  • HMRC will enable firms facing difficulties to spread their tax – VAT, corporation tax, income tax and national insurance – over a longer timetable.
  • Government monitoring of banks receiving Government funding, to ensure they maintain the availability of lending to SMEs at 2007 levels.
  • Defer the planned increase in the small companies’ rate of corporation tax, which firms pay on their profits.
  • Extend scope of tax repayment system so businesses which were previously profitable but are now making losses, which enables them to receive tax repayments. Losses of up to £50 000 can be offset against profits made for the last three years, rather than one year as at present.

Larger companies

  • Exemption for foreign dividends in 2009 for large and medium businesses.
  • Other Taxation measures
  • VAT cut from 17.5% to 15% until the end of next year.
  • From April 2011 all rates of National Insurance Contributions, for both employees and employers increase by 0.5%
  • From April 2011 a new rate of income tax of 45% on income over £150 000.
  • Offset the VAT reduction by increase in fuel duty