The chancellor has set out a series of measures aimed at providing the nation’s ‘makers, doers and savers’ with the mechanisms to sustain Britain’s upward economic trajectory.
In his Spring Budget, chancellor George Osborne targeted energy, finance, infrastructure and skills as areas where government intervention will assist Britain’s manufacturers in rebalancing the economy.
‘We’ve got to support our manufacturers if we want to see more growth in our regions,’ Osborne told Parliament today. ‘We’re going to do this by investing in new sources of energy: new nuclear power, renewables, and a shale gas revolution. We’re going to do this by promoting energy efficiency.’
To achieve this, the government is introducing a £7bn package to cut energy bills for British manufacturers, which includes capping the Carbon Price Support rate at £18 per ton of CO2 from 2016-17 for the rest of the decade.
‘This will save a mid-sized manufacturer almost £50,000 on their annual energy bill’ said Osborne. ‘Second, I’m extending the existing compensation scheme for energy intensive industries for a further four years to 2019-20.
‘Our steel makers, chemical plants, paper mills and other heavy energy users make up 35 per cent of our manufacturing exports and employ half a million people. This scheme helps the companies most at risk of leaving to remain in the UK.
‘Third, I’m introducing new compensation worth almost £1bn to protect these energy intensive manufacturers from the rising costs of the Renewable Obligation and the Feed-In Tariffs. Otherwise green levies and taxes will make up over a third of their energy bills by the end of the decade.
‘Fourth, I am exempting from the carbon price floor the electricity from Combined Heat and Power plants, which hundreds of manufacturers use. And this entire package delivered without any reduction in the investment in renewable energy.’
‘The freezing of the Carbon Price Floor will translate into greater clarity for manufacturers’ energy bills through to 2020 and provide much needed investment certainty,’ said Gareth Stace, head of Climate & Environment Policy at EEF. ‘The Renewables Obligation compensation for energy intensive industries will also help to level the level playing field these companies need to compete effectively with others around the globe and, keep production here in the UK.’
Companies looking to export were given a boost with lending finance for exports doubled to £3bn and interest rates cut by a third, whilst those looking to invest in equipment were provided with an extension to the Investment Allowance, which has doubled in value to £500,000 and been extended until the end of 2015. R&D tax credits for loss-making small businesses rose also from 11 per cent to 14.5 per cent.
‘Almost every business across Britain will pay no upfront tax when they invest in the future,’ said Osborne, who also committed to research programmes such as the Alan Turing Centre for ‘big data’ and algorithm research, plus catapult centres for cell therapy and graphene research.
‘If Britain isn’t leading the world in science and technology and engineering, then we are condemning our country to fall behind,’ he said, adding that grants will be extended for smaller businesses to support over 100,000 apprenticeships. New degree level apprenticeships will be introduced also.
Commenting on today’s budget, Terry Scuoler, chief executive of EEF said: ‘The chancellor said this would be a budget for manufacturers and he has delivered on his word. The government clearly recognises the need to make the competitiveness of the UK a priority. We argued strongly for the need to reduce the rising cost of energy faced by many companies, and he’s acted on that. Taken together with measures to boost investment, exports and skills, the chancellor deserves a pat on the back.We have always said that to achieve a resilient recovery government must back manufacturing and we’ve seen that from this budget.
‘We now have some of the building blocks in place which will help rebalance the economy. But, as the chancellor suggests, there’s still more work to be done. We now need to take steps which will lead to longer term solutions beyond current spending and electoral cycles. This will finally give business the predictability and certainty to encourage the successive rounds of investment our economy needs.’
Today’s Spring Budget also provides:
£270m guarantee for the Mersey Gateway Bridge
£140m additional funding for immediate repairs and maintenance to damaged flood defences across Britain.
£200m for national pothole repairs
£150m of finance to support Right to Build
Support over 200,000 new homes
Source: HM Treasury