Chancellor Jeremy Hunt will announce up to £360 million in funding for a range of manufacturing and research and development projects as part of this week's Budget, with green industries expected to be among the key beneficiaries.
The run-up to the budget has been dominated by briefing and speculation over the affordability of proposed tax cuts, but the Treasury confirmed this morning that the government would seek new funding for a number of green technology programmes.
In particular, £200 million of joint public and private sector investment will be earmarked for the development of zero-carbon aircraft technology, while a further £73 million will be allocated to green automotive technology projects.
The Chancellor will also announce a £120 million increase for the Green Industries Growth Accelerator (GIGA), bringing the total value of the fund to almost £1.1 billion.
“We are sticking to our plan by backing the industries of the future with millions of pounds of investment to make Britain a world leader in manufacturing, secure the high-skilled jobs of the future and deliver the long-term change that our country needs. to deliver a better future for Britain,” said Hunt.
The funding package was also welcomed by Claire Coutinho, Secretary for Energy Security and Net Zero, who said: “We are supporting our green industries with additional funding for the Green Industries Growth Accelerator – bringing the total to over £1 billion. pioneers in advanced manufacturing and this will allow us to continue that great British tradition. While we have attracted £300 billion of low carbon investment since 2010, with £24 billion since September alone, this will help unlock even more.”
The new wave of funding – which also includes £92 million for life science projects – includes more than £36 million awarded through competitions run by the Advanced Propulsion Center UK (APC) competitions, which aim to develop the next generation of battery-electric accelerate vehicles. (EVs).
Meanwhile, £40 million will be awarded to a project to develop zero-carbon aircraft engine technology led by Cambridge-based Marshall Group, while around £96 million will be provided to a range of green aviation projects led by Airbus. In addition, the Treasury confirmed that the £975 million in aerospace funding over five years from 2025, as announced in the latest autumn statement, will be allocated to the Aerospace Technology Institute (ATI) programme.
The Chancellor also provided an update on the Green Industries Growth Accelerator (GIGA), confirming that around £390 million of the scheme's extended budget is earmarked to expand the UK's supply chains for electricity grids and offshore wind energy sectors, while around £390 million will be allocated to carbon capture, use and storage and hydrogen projects. The remaining £300 million has been awarded to projects to enable British production of the fuel needed to power high-tech new nuclear reactors, known as HALEU.
Finally, the Treasury has released further details of the £50m two-year Apprenticeship Growth Pilot Project announced in the Autumn Statement, including confirmation that eligible apprenticeships for pipe welders, nuclear technicians and laboratory technicians will now benefit from targeted payments worth £3,000 for each start. of a student.
Katherine Bennett, CEO of High Value Manufacturing Catapult, said the new funding announcements are “welcome news for our domestic life sciences, automotive and aerospace sectors and will support the growth of cross-sector low-carbon supply chains in the UK”.
“From developing technology for low-carbon aircraft wings to supporting the expansion of UK supply chains in offshore wind, hydrogen and electrification, our network of innovation centers is helping to drive industrial transformation in the UK,” she added.
The new funding announcements were also welcomed by Dan McGrail, CEO of trade body RenewableUK. “The increase in GIGA funding to secure further private investment in green manufacturing jobs will allow us to deliver more goods and services to projects here and aboard,” he said. “It is also good to see that almost £400 million of that funding will be used specifically to grow our offshore wind supply chain and electricity networks.”
However, McGrail added that the Chancellor must seek to deliver a broader package of reforms and investment to seize the opportunity “to build on Britain's growing investor confidence and put us ahead of our global competitors in the escalating global race to build new clean energy.” projects and, crucially, to take advantage of new manufacturing and supply chain opportunities.”
The government has faced widespread calls from politicians, business groups and campaigners to boost public investment in green projects, to help unlock private sector investment and put the country back on track to meet its climate targets to fetch.
On Friday, a letter backed by a cross-party group of MPs called on Hunt to “use the upcoming Spring Budget to tackle the ongoing crisis of underinvestment facing Britain” by channeling more government spending to help achieve net zero targets.
And today, the Carbon Capture and Storage Association, Make UK and the Global Infrastructure Investor Association have jointly written to Hunt urging him to confirm revenue support policies for the fast-growing carbon capture industry, allowing the first wave of projects in Great Britain Britain could reach a peak. Final investment decision.
The letter warns that without urgent action, Britain risks missing out on a major investment opportunity and failing to meet its legally binding emissions targets. “Without clarity on future revenue support now, given the six to seven year lead times for new CO2 storage sites, it is highly likely that there will not be sufficient development of those sites ready to meet known industrial demand from 2030 onwards. the letter argued. “We need a credible domestic commitment if we are to secure part of the global supply chain… Britain is well placed to take advantage of these global opportunities, but we are losing pace. Commitment is now needed on a revenue support framework that is aligned with ambition, to attract the necessary private sector investment.”
The Treasury is also considering industry calls to reduce VAT on new electric vehicles, bring VAT on public electric vehicle charging points into line with the five percent rate applicable to those who can charge at home, and increase funding for energy efficiency programs, among other things. to suggest.
However, all the pre-budget briefing suggests that the focus will be on the extent to which the Chancellor can identify new sources of revenue that will allow him to deliver the tax cuts desired by Conservative MPs before the upcoming election.
In a new article published today, campaign group Greenpeace warned that the focus on short-term budget concerns among both government and opposition risks continuing to underinvest in green infrastructure.
“Over the past six months, both major parties have rolled back key climate commitments, based on costs,” the group said. “In September, Rishi Sunak announced that the Conservative government would 'roll back' its key net zero commitments on the grounds that the transition was costly for ordinary people, despite research suggesting net zero could both grow the economy and can reduce living costs. pressure through measures such as home insulation. Meanwhile, the Labor Party has sharply scaled back its green spending pledge of £28 billion per year, ostensibly because this conflicted with their prioritization of certain 'budget rules'.
“Failure to challenge the austerity logic poses a significant risk to society at a time when economists at the LSE are warning that our public services and the wider economy are in urgent need of investment, especially in the green economy.”
The group also suggested that some of the tax reforms Hunt was reportedly considering fell short of the changes needed to catalyze more investment in clean technologies. “Rumours include increasing excise duties on business class flights, scaling back the 'non-dom' tax regime, expanding the windfall tax on the profits of oil and gas companies and abolishing tax breaks for second homeowners who rent rental properties. to issue properties as holiday rentals,” the briefing document said. “While all of these measures would be welcome if actually implemented, they still fall significantly short of the scale of progressive tax reforms needed to create a greener and fairer society, both at home and abroad. ”
If the government announces new tax increases to help fund an income tax cut, it would pose a significant challenge for Labor, which has planned increases such as an extension of the windfall tax on oil and gas companies to fund new spending programs, such as an improved domestic energy efficiency program.
The deadline for entries for this year's UK Green Business Awards has been extended by a week to March 8.
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