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Manufacturers welcome Autumn Statement

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George Osborne
George Osborne

Government to invest in energy R&D, reform the Renewable Heat Incentive, and continue to support Catapult centres

Energy research, infrastructure investment, industry and apprenticeships have been addressed by chancellor George Osborne's Autumn Statement today.

The chancellor announced that spending on energy research is to be doubled and support for low carbon electricity and renewables is to more than double.

Osborne said: “Investing in the long term economic infrastructure of our country is a goal of this Spending Review, and there is no more important infrastructure than energy. So we’re doubling our spending on energy research with a major commitment to small modular nuclear reactors.

“We’re also supporting the creation of the shale gas industry by ensuring that communities benefit from a Shale Wealth Fund, which could be worth up to £1 billion. Support for low-carbon electricity and renewables will more than double.”

The chancellor said the development and sale of Ultra Low Emission Vehicles will continue to be supported – but in light of the slower than expected introduction of more rigorous EU emissions testing, the removal of the diesel supplement from company cars will be delayed until 2021.

Plans to reform the Renewable Heat Incentive to save £700 million were revealed.

The chancellor also announced plans to devolve business rates to local councils who will be allowed to earmark funds for specific infrastructure projects.

Meanwhile, the Department for Transport's operational budget will fall by 37%, but its capital spending will increase by 50% to £61 billion. "That funds the largest road investment programme since the 1970s, for we are the builders," said Osborne.

“It means the construction of HS2 to link the Northern Powerhouse to the south can begin. The electrification of lines like the Trans-Pennine, Midland Main Line and Great Western can go ahead. We’ll fund our new Transport for the North to get it up and running.”

The chancellor committed to the same level of support for the UK's aerospace and automotive industries for the next five years. Spending on the new catapult centres will increase and the cash support provided through through Innovate UK is to be protected.

Osbourne said: "In this Parliament I’m protecting it (the budget for science) in real terms so it rises to £4.7 billion. That’s £500 million more by the end of the decade. Alongside £6.9 billion in the capital budget too.”

In response to the announcement, Paul Everitt, chief executive of ADS Group, said: “The UK’s aerospace industry will benefit from today’s government decision to prioritise long-term funding for the Aerospace Technology Institute (ATI).

“The ATI, a successful initiative of the Aerospace Growth Partnership providing strategic focus and funding for aerospace R&D, is changing global perceptions of the UK as a place to invest.

“Today’s announcement will give UK industry confidence to continue investing in the stimulation of breakthrough technologies which lead to a larger share of the export market, higher productivity and deliver greater economic returns.”

Terry Scuoler, chief executive of EEF, the manufacturers’ organisation, added: 
“The chancellor’s enthusiasm for an industrial strategy for Britain is hugely welcome, as is his promise to continue to support Catapult centres, the successful incubators of new business ideas and product development.

“Moving to an exemption of energy intensive sectors from the costs of renewables is enormously welcome and demonstrates that government is dedicated to finding a long term solution to this problem."

Meanwhile, Professor Philip Nelson, chair of the Research Councils UK Executive Group, said: “Across government there are programmes facing significant cuts and against this background we acknowledge the value the government has placed on research with this settlement. It means that the UK’s research base will be able to maintain its world-class research outputs, continue to partner with and attract industry, maintain its flow of trained researchers into the economy and society and continue to inspire the next generation."

The Summer Budget announced that three million new apprenticeships will be created by 2020, funded by a levy on large employers. The apprenticeship levy will come into effect in April 2017, at a rate of 0.5% of an employer’s pay bill. A £15,000 allowance for employers will mean that the levy will only be paid on employers’ pay bills over £3 million. Less than 2% of UK employers will pay the levy.

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