BUDGET Breaking: Increase in investment in UK R&D

GKN aerospace manufacturing

The government has announced an increase in public investment in UK R&D to £20 billion by 2024-25, representing an increase of around a quarter in real terms.

It will also announce plans to reform R&D tax reliefs to support modern research methods and double the available scholarships for AI and Data Science Master’s conversion courses with a £23 million investment for under-represented groups.

It will support private R&D investment by increasing funding for core Innovate UK programmes, reaching circa £1 billion per year by 2024-25, over £300 million more per annum than in 2021-22.

And provide funding for the UK to become the first country to launch a rocket into orbit from Europe in 2022, with the aim of becoming a leader in commercial small-satellite launch, as set out in the National Space Strategy.

It will also give an extension of the temporary £1 million level of the Annual Investment Allowance to March 2023, providing more upfront support to help businesses across the UK to invest and grow.

It will offer new investment incentives in England totalling almost £750 million, including tax relief for eligible green investments and a new ‘business rates improvement relief’.

Other funding promises include:

£6.1 billion to back the Transport Decarbonisation Plan, boosting the number of zero emission vehicles, helping to develop greener planes and ships, and encouraging more trips by bus, bicycle and foot.

Up to £1.7 billion of direct government funding to enable a large-scale nuclear project to reach a final investment decision this parliament, subject to value for money and approvals. The government is in active negotiations with EDF over the Sizewell C project.

£380 million for the UK’s offshore wind sector.

£1 billion Net Zero Innovation Portfolio, as announced in the Ten Point Plan, which is accelerating near-to-market low-carbon technology innovations and the aligned £385 million Advanced Nuclear Fund which is developing the next generation of small and advanced modular reactor technologies.

£3.9 billion to decarbonise buildings, including £1.8 billion to support tens of thousands of low-income households to make the transition to net zero while reducing their energy bills.

Stephen Phipson, Chief Executive of the manufacturer’s organisation Make UK, said: “Make UK welcomes the direction set out by the Chancellor today but hopes to see more focus on manufacturing as the plans unfold. At a time of such hardship for so many people the Chancellor was right to prioritise help for the most vulnerable and those on low incomes. Manufacturers agree this has to be a priority for spending in the short term and will support his aim.

“Overall, however, as far as manufacturers are concerned the rest of the statement generated a mixed response. While there were some welcome announcements on business rates and the extension of the annual investment allowance, the announcements on skills amounted to little, if any, new money while the delay in the R&D spending target goes against the aim of making the UK a science superpower.  In addition, we had hoped to hear more about driving digitalisation and Net Zero Transition, issues at the forefront of the next industrial revolution. Furthermore, while growth is returning, future out the prospects look anaemic and will not be helped by the substantial tax rises companies are facing

“The current approach would benefit from a long-term economic plan. We face huge technological and societal challenges. Manufacturers are ready to seize the opportunities these challenges will provide and, in many cases, are already providing many of the solutions.

“But they can only do so if Government is willing to work with the grain of business and industry. This requires a partnership to develop the vision for our economy in the medium to long term and the development of policies which will support it.”