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Jones Lang LaSalle comments on the Chancellor’s 2012 Autumn Statement announcement
London, 5th December 2012 - The Chancellor of the Exchequer, George Osborne, today announced that the CRC Energy Efficiency Scheme (CRC) will be retained in a simplified form, at least until a review of its effectiveness in 2016. Its future has been in doubt since the 2012 Budget announcement in March this year.
The Government has announced that the Performance League Table element will be scrapped and it is likely that the CRC will be viewed as a more straightforward environmental tax from now on. The cost of allowances is set to rise from £12 a tonne to £16 a tonne in 2014/15. Thereafter, price rises will be linked to the Retail Price Index (RPI).
According to Jones Lang LaSalle, the reprieve for the CRC will be a blow for many in the real estate sector, who were lobbying for it to be scrapped. Of most concern for the property industry will be the prospect of the removal of the Core / Residual distinction for energy supplies. If this proposed change goes ahead it will result in considerable extra work for participants and the managing agent community in gathering data for smaller supplies.
However, positive news for landlords is that it may prove easier to pass allowance costs onto tenants, given that it is likely that the simplified scheme will be viewed as a more straightforward tax as opposed to a trading scheme.
Abigail Dean, Director, Upstream Sustainability Services at Jones Lang LaSalle, commented: “The retention of the CRC, even in a simplified form, will come as a surprise to many in the property industry. The continued uncertainty about its future will be unwelcome as the industry has been calling out for more certainty from Government on all environmental legislation.
“We hope that the simplifications to the scheme announced today will ease the burden on our clients, although we are concerned about the unintended consequences of the removal of the Core / Residual distinction. Landlords will certainly welcome any change to the scheme that makes it more straightforward to allocate the costs to the tenants using the energy. “
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