Delivered in the House of Commons yesterday (March 15, 2023), the chancellor Jeremy Hunt also gave support to nuclear, skills and SMEs in the form of credits on R&D expenditure.
“Growth is one of the prime minister’s five priorities for our country,” he said. “I deliver that today… by harnessing British ingenuity to make us a science and technology superpower.”
Up to £20bn is being made available to support the early development of Carbon Capture Usage and Storage (CCUS), starting with projects on the East Coast, Merseyside and North Wales. According to the chancellor, this will pave the way for CCUS facilities across the UK by 2050.
“This will support up to 50,000 jobs, attract private sector investment and help capture 20-30 million tonnes of CO2 per year by 2030,” he said.
He added that an artificial intelligence sandbox will be launched to commercialise AI products more quickly, adding that the government will work with the Intellectual Property Office ‘to provide clarity on IP rules so Generative AI companies can access the material they need’.
More support for AI is being made available with a £1m prize being awarded every year for ten years to people or teams conducting ground-breaking AI research.
Hunt said: “Because AI needs computing horsepower, I today commit around £900m of funding to implement the recommendations in the independent Future of Compute Review for an Exascale supercomputer.
“The power that AI’s complex algorithms need can also be provided by quantum computing.”
He continued: “So today we publish a quantum strategy which will set our vision to be a world leading quantum enabled economy by 2033 with a research and innovation programme totalling £2.5bn.”
To encourage private sector investment, nuclear power will be classified as ‘environmentally sustainable’, opening access to the same investment incentives as renewable energy.
Hunt also announced the launch of Great British Nuclear, which has been tasked with developing a resilient pipeline of nuclear new builds that will help provide up to one quarter of the UK’s electricity by 2050.
The viability of Small Modular Reactors will be the subject of a competition due for completion by the end of the year. The government will co-fund projects deemed feasible.
“The launch of Great British Nuclear with powers to select sites for new projects will make nuclear deployment much more efficient and give the supply chain a clear pipeline to work from,” commented Tom Greatrex, chief executive of the Nuclear Industry Association. “The SMR selection will put us back in the global race, creating opportunities for home-grown technology and others to bring jobs and investment to the UK and helping us capitalise on export opportunities in a massive global market.”
SMEs that spend 40 per cent or more of their total expenditure on R&D will be able to claim a credit worth £27 for every £100 they spend.
“That means an eligible cancer drug company spending £2m on research and development will receive over £500,000 to help them develop breakthrough treatments,” said Hunt. “It is a £1.8bn package of support helping 20,000 cutting edge companies who day by day are turning Britain into a science superpower.”
‘Full expensing’ has also been introduced for three years, with investments into IT equipment, plant or machinery deducted in full and immediately from taxable profits.
“It is a corporation tax cut worth an average of £9bn a year for every year it is in place,” said Hunt. “And its impact on our economy will be huge. The OBR says it will increase business investment by three per cent for every year it is in place.”
“The new full capital expense deduction is a welcome addition to soften the blow of losing the capital allowance super deduction that expires at the end of this month,” commented Phil Alston, commercial director of iconsys. “Whilst not as generous as the existing scheme, this will allow UK manufacturing businesses to continue to invest in automating their processes and help with the push towards net zero.”
Hunt also increased the pension allowance cap (from £40,000 to 60,000 pa) and abolished the lifetime pension upper limit to encourage more mature ‘return to work’ employees and to discourage early retirement. So-called Returnerships are to be established also to encourage the over 50s back into the workplace.
“They will bring together our existing skills programmes to make them more appealing for older workers, focussing on flexibility and previous experience to reduce training length,” said Hunt.
“While manufacturers will benefit from improved skills training options for people who have become economically inactive, government support for upskilling and retraining remains piecemeal, and take-up of existing pathways is still low,” commented Jamie Cater, senior employment policy manager at Make UK. “It is important that government works with industry to make sure that workers of all ages can access the training they need, and that employers and employees alike have a clear understanding of what is available to them.”
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