In his autumn statement, the Chancellor re-committed the £20billion R&D budget and confirmed that the Sizewell C nuclear power station will continue to move forward
Amid tax increases and spending cuts of around £50 billion (US$60 billion), funding for research and development is one of the few bright spots in a budget by otherwise focused on austerity presented by British Chancellor Jeremy Hunt in his autumn statement.
Insisting that his plan, which Hunt says prioritizes stability, growth and public services, will ‘get us through rough waters’, news of further cuts has cast a dark shadow over a nation struggling with the highest level of recession in 41 years, and the prospect of households facing the biggest drop in living standards since records began, the Office for Budget Responsibility said in its accompanying report.
Blaming the economic downturn on unprecedented global pressures caused by the pandemic and the war in Ukraine, Hunt is seeking to claw back money from companies ‘making extraordinary profits from high energy prices’ by raising the tax on energy profits on oil and gas companies from 25% to 35%. A new temporary tax of 45% will also be introduced for electricity producers. “Together these measures will raise over £55bn from this year through 2027-28,” the government said.
However, when it came to other energy and environmental issues, such as promoting a green economy and investing in renewable energy, there was nothing for the industry but a continued commitment to move forward with Sizewell C (subject to signing a contract with EDF), and that government plans to reduce emissions and reach net zero by 2050 remained a priority.
Hunt said government spending on R&D will rise to £20bn a year by 2024-25, a cash increase of around a third from 2021-22, and a £1.6 billion investment completed to the British Catapult program has also been confirmed. These nine independent not-for-profit Technology and Innovation Centers set up by Innovate UK include the Compound Semiconductor Applications Catapult in Wales, the Digital Catapult Center in Northern Ireland and the Offshore Renewable Energy Catapult Center in Scotland.
“It is very welcome that the Chancellor has reaffirmed the government’s commitment to investing £20bn a year in research and development by 2024-25,” said the chair of the science and technology committee. , Greg Clark. “I am pleased that the government continues to recognize that R&D is the long-term driver of growth and productivity, and crucial to the UK’s future prosperity. The decision is a vote of confidence in science and innovation in the UK and should strengthen our world-class institutions.
On the consumer side, Hunt announced that the Energy Price Guarantee, which caps typical energy bills at £2,500, will continue to provide support from April 2023, with the cap rising to £3,000 .
Keeping electric cars exempt from Vehicle Excise Duty (VED) was however not an option, and from April 2025 electric cars will start paying VED in the same way as petrol and diesel vehicles. . This could delay environmental benefits and slow the path to electrification, the auto industry has warned.
Many have lambasted the budget for failing to address years of low productivity by postponing most tough spending decisions for a few years.
“The truth is that we have become much poorer. We are going to have a long, hard and unpleasant journey; a journey that has been made more arduous than it could have been by a series of clean economic goals,” said Paul Johnson, director of the Institute for Fiscal Studies (IFS).