Predicted to generate £3.4bn of private investment, the new Investment Zones join Sheffield, Rotherham, Doncaster and Barnsley as areas targeted for economic growth through advanced manufacturing.
The measure was announced yesterday (November 22, 2023) by the chancellor Jeremy Hunt as he delivered his Autumn Statement to parliament.
In his speech, Hunt reiterated the announcement made on November 20 that £4.5bn of support will be made available over the five years to 2030 to attract investment into strategic manufacturing sectors.
The funding includes £2bn for zero emission investments in the automotive sector, £975m for aerospace, £520m for life sciences, and £960m for the new Green Industries Growth Accelerator, which will focus on offshore wind, electricity networks, nuclear, CCUS and hydrogen.
Acknowledging ‘that AI will be at the heart of any future growth’, Hunt also announced £500m of funding over the next two years to help establish two more innovation centres that will build on similar initiatives in Bristol and Edinburgh.
“These targeted investments will ensure the UK remains competitive in sectors where we are already leaders and innovative in areas where we are not,” said Hunt. “Taken together across our fastest-growing innovation sectors, this support alone will attract an estimated £2bn of additional investment every year over the next decade.”
To encourage investment into plant and machinery, Hunt announced that full expensing will be made permanent, allowing companies to write off 100 per cent of the cost of investment in qualifying plant and machinery in one go.
Further support for businesses includes lowering to 30 per cent the threshold for additional support for R&D-intensive loss-making SMEs. Energy-intensive industries will benefit also from an extension to the Climate Change Agreement Scheme, which will provide around £300m of tax relief every year until 2033 to encourage investment in energy efficiency and support the transition to Net Zero.
“Taken together, the overall impact of today’s growth measures will be to increase business investment in the UK economy by around £20bn a year within a decade, nearly one per cent of GDP at today’s level,” said Hunt. “That is the biggest ever boost for business investment in modern times, a decisive step towards closing the productivity gap with other major economies.”
Commenting on yesterday’s announcement, Professor Sir Jim McDonald FREng FRSE, President of the Royal Academy of Engineering, said: “Investment and support are essential if the government is to realise its ambition of securing strategic advantage through emerging technologies, from AI, telecoms and semiconductors to engineering biology and quantum.
“However, our strategic advantage in research can only be translated into tangible economic benefits through real products and services and I commend the chancellor’s support for advanced manufacturing, including the development of green industry, together with targeted regional investment.”
“I’ve been relentless for many years about the need for the UK to invest in more automation and technology and the ‘full expensing’ announcement today could well be a significant driver in ‘tipping the balance’,” added Tony Hague, CEO of PP Control & Automation. “It should promote much-needed investment to drive productivity and increase efficiencies, offsetting rising input costs around materials, energy, transport, and labour.”
Sounding a note of caution, Sharon Todd, CEO of The Society of Chemical Industry, said: “Today’s measures indicate that the chancellor is starting to understand what is required to salvage the UK’s diminishing industry. However, he must listen to the wider science base, beyond just life sciences and clean technology. Global businesses and start-ups which innovate and make essential products, such as food and consumer products, are investing elsewhere. The UK is no longer competitive for investment.”
Full details from the 2023 Autumn Statement can be found here.