Business and research at forefront of Chancellor’s plan to improve the UK’s productivity, as laid out in the Autumn Budget 2018.
Chancellor Philip Hammond has committed £1.6bn of new investment to support the government’s Industrial Strategy, which includes funding for the Industrial Strategy Challenge Fund, which aims to strengthen UK science and innovation by taking world-class research from the lab through commercialisation for the benefit of society.
Speaking of UK infrastructure, Hammond announced that half of the £600bn infrastructure pipeline will be built and financed by the private sector. ‘I remain committed to the use of public-private partnership where it delivers value for the taxpayer and genuinely transfers risk to the private sector,’ he said.
To increase productivity, the Chancellor outlined a number of measures that will helps businesses. The National Productivity Investment Fund – focused on R&D, housing, and economic infrastructure – will be expanded to £38bn by 2023-24. Other schemes to increase productivity include:
- Annual Investment Allowance will be increased from £200,000 to £1m for two years to help businesses invest in machinery
- Targeted relief to help buy IP-rich businesses
- The expansion of Start-Up Loans to support 10,000 more entrepreneurs by 2021
- Reintroduce a PAYE restriction for SMEs
- An extra £200m to the British Business Bank to replace access to the European Investment Fund, which supports entrepreneurship and innovation throughout Europe, dependent on the outcome of Brexit negotiations
‘Meeting the productivity challenge means tapping the potential of every region and nation,’ Hammond continued. The Transforming Cities Fund will be increased to £2.4bn, including £115m for Digital Catapult Centres in the North East, Northern Ireland and the South East, £37m of extra funding for the Northern Powerhouse Rail, and the maintenance of tax rates in Scotland to support its oil and gas industry.
The development of skills is a priority for the government, said Hammond, with £150m dedicated to fellowships that attract the brightest international scientific research talent to the UK and a £695m new apprenticeship scheme. To encourage the uptake of apprentices in smaller businesses, the amount they contribute will decrease from 10% to 5%.
A sustainable future was a common theme throughout the Budget, and Hammond commented on the progress made by Environment Secretary Michael Gove during his tenure. The Chancellor announced the introduction of a new tax on the manufacture and import of packaging that contains 30% recycled plastic. Issues will be addressed by a reform of the Packaging Producer Responsibility scheme.
On the ‘Latte Levy’ proposed to government earlier this year, he said: ‘I have also looked carefully at the case for introducing a levy on the production of disposable plastic cups, not just for coffee, but for all types of beverage, I have concluded that a tax in isolation would not, at this point, deliver a decisive shift from disposable to reusable cups.’