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8 | 27Th March - 2nd aprIL 2015 | UTILITY WEEK Analysis C hancellor George Osborne addressed the nation with his final financial state- ment before the general election on 7 May. It was his last big setpiece opportunity to score some political points, and slam the credibility of Ed Balls and Ed Miliband. Among the (many) digs surrounding two kitchens made at the Labour leader's expense, Osborne knew he had a tough job. The statistics may show things get- ting better – unemployment down, the number of people in work up, and the UK growing faster than any other developed economy – but the wider public have yet to feel any real difference in their pockets. A spanner in the works could be the struggles in the oil capital of the UK, Aberdeen. The crash in the oil price has put jobs there at risk. Once profitable oil fields are profitable no longer, and fields once ripe for investment no longer appear attractive to the likes of Centrica. Osborne, aware of how much the UK still relies on North Sea revenues had to act. Tax breaks and support worth £1.3 billion were what he offered. And he scaled back the 30 per cent supplementary tax charge on North Sea profits to 20 per cent, backdated to the start of the year. This, Osborne said, would deal with the "pressing danger" faced by the offshore industry. He also set out plans to cut the Petroleum Revenue Tax from 50 per cent to 35 per cent "to support continued production in older fields", and for the government to invest in new seismic surveys in "under-explored areas in the UK Continental Shelf ". These measures are designed to boost North Sea oil production by 15 per cent by the end of the decade. So the fossil fuel sector was kept happy. But as opposition, renewable and environ- mental groups sharpened their tongues to remind the chancellor of the pledge made by prime minister David Cameron that this would be "the greenest government ever", Osborne threw them a bone in the shape of a tidal lagoon. Trailed before Osborne stood up at the dispatch box, this renewables nugget – which the Tories will undoubtedly point to as proof of their green credentials during the election campaign – means that talks on funding the Swansea Bay Tidal Lagoon will start. These discussions are expected to take "many months" – and if the negotiations between EDF Energy and the government with regards to Hinckley Point C are any- thing to go by, we could be in for a long wait. However, the significance of the scheme, and one not lost on Osborne, is the potential chain of tidal lagoons that could follow from the initial 320MW scheme. This would be played up as a Con- servative legacy of green power projects. Renewable UK hailed the announcement as a "significant step forward" but also warned the government not to neglect other renewable energy sources. Elsewhere in the Budget, energy-intensive industries, set to be stung by increasing energy bills as a result of the impact of renewable energy subsidies, were told they will have access to a £250 million compensation pack- age by 2015/16, a year earlier than planned. The crackdown on energy bills – another key election flashpoint – was also buried in the detail of the Budget document in the form of downward pressure on transmission fees. This will be achieved by introducing competitive tendering for new infrastruc- ture – something Ofgem announced the day before the Budget. The Treasury said it hoped this move would remove hundreds of millions from consumer energy costs. The Lib Dems, junior coalition partners and increasingly pushed to the margins by the Tories as polling day approaches, did rebel, with chief secretary to the treasury Danny Alexander delivering an alternative budget to the commons (see column on fac- ing page). This was yet another example of how the Budget – which will have limited impact with only days le before Parliament dis- solves and the general election campaign gets into top gear – is politically vital. The Lib Dems want to take credit for their input, but Osborne knows this was his final opportunity to silence the doubters and prove to the public that the Conservatives have a long-term economic plan that can deliver for the "hardworking families" of the country, as well as deliver cheaper and greener power. A last chance to impress Help for a struggling offshore sector and a fillip for tidal power made this a politically successful Budget. By Mathew Beech. T he UK's energy networks require an unprecedented level of investment, with Decc estimating that up to £41 billion could be invested in gas and electric- ity networks over the next five years to 2020. In planning this programme of invest- ment, there will be a need to balance national interest with local impact. Replac- ing ageing infrastructure and expanding our networks will be essential to overcoming energy challenges and meeting the demands of a modern society. Investment in secure, reliable energy networks is undoubtedly in the UK's long-term national interest. At the same time, energy developments are large scale and must deliver gas and electricity into people's homes and businesses, so it is inevitable they will have an impact on local communi- ties. The public will need to be engaged in a conversation about the need for investment so they understand the costs and benefits associated with building vital infrastructure. Over the course of the next Parliament there must be a concerted effort on behalf of the incoming government to communicate the case for such investment more effec- tively with the public as a whole and with the communities that will be most impacted by development. This dialogue should form part of a more structured approach to national infrastructure planning, sup- plemented at a local level to ensure real engagement with communities. Over the longer term, smarter networks and smart meters have the potential to defer or remove the need for traditional reinforce- ment of the grid and therefore significantly reduce the impact of development work in local communities. The government will have an important role to play over the next five years to ensure these network benefits can ultimately be realised, particularly through support for innovation and during the smart meter rollout. David Smith, chief executive, Energy Networks Association Viewpoint enerGy DeveLopmentS are LarGe SCaLe, So it iS inevitabLe they wiLL have an impaCt on LoCaL CommUnitieS "The next government must make the case for utility investment" £1.3bn Tax breaks and sup- port for north Sea producers £1bn Swansea Bay tidal lagoon