4.42 Autumn Budget 2021 announced that public investment in R&D will increase to record levels: £20 billion per year by 2024-25; significant progress towards the government’s ambition to spend £22 billion by 2026-27. This landmark funding for science and innovation will help to deliver the government’s science superpower ambitions and tackle the great challenges facing the world, whether climate change or health emergencies.
4.45 High skilled immigration plays a disproportionate role in driving innovation; around half the UK’s fastest growing businesses have at least one non-UK-born co-founder, and non-UK born staff account for around 40% of academic staff in engineering, technology, and biological, mathematical and physical sciences at UK universities.14,15 That is why the government is focused on creating a visa regime that will attract highly skilled and entrepreneurial individuals from across the world.
4.48 The UK has one of the most generous R&D tax relief systems in the world, spending, as a percentage of GDP, more than any other country in the OECD. Since 2007 spend has increased from 0.05% to 0.34% of GDP in 2019. Despite this, the UK has not seen the desired results, with self-financed business R&D only rising from 1.0% to 1.2% of GDP, which is less than half the OECD average.16
1.17 Global energy prices were volatile even before Putin’s invasion of Ukraine and remain much higher than pre-pandemic levels. Increased global demand for energy, short-term supply disruptions in major oil-exporting economies, weather patterns in Europe and Asia affecting both the supply of renewable energy and the demand for heating, and lower gas storage balances have all contributed to higher prices. As the OBR sets out in the EFO, the UK is “a net energy importer with a high dependence on gas and oil”, meaning higher energy prices have led to a deterioration in the UK’s terms of trade – the relative prices of the UK’s exports compared with its imports.1
1.18 Following Putin’s invasion of Ukraine, energy prices have risen further amid disruptions to the supply of Russian energy to global markets. Global oil prices rose 9.3% between the week beginning 14 February (the last full week before the invasion) and the week beginning 14 March, and UK and European wholesale gas prices increased by more than 30% over the same period. Rising global energy prices will directly affect UK inflation in the short and medium term. While the Office for Gas and Electricity Markets (OFGEM) energy price cap protects consumers from the rapid changes observed in the wholesale energy market in the short term, the rise in oil prices has already affected petrol pump prices in the UK, which are now at record highs having increased by almost 12% over the past month.11
1.24 The government will soon be setting out an energy security plan. This will include measures across hydrocarbons, nuclear and renewables to support energy resilience and security while delivering affordable energy to consumers. Building on the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, the government is raising its delivery ambitions across energy technologies to end the UK’s dependency on hydrocarbons from Russia.14
Maximising economic pressure on Putin’s regime The UK has been at the forefront of the international community’s coordinated response to Putin’s aggression. Since Putin launched the Russian Federation’s invasion, the government has taken unprecedented measures to exclude Russian entities from international finance and the UK financial system. This includes asset freezes on Russian banks that collectively hold more than £250 billion in assets, as well as restricting financial transactions with the Central Bank of Russia. The government has imposed asset freezes on over 1000 high-value individuals, entities and subsidiaries. It has also barred the Russian state and over 3 million Russian companies from raising funds in the UK. In addition, the government has announced additional import tariffs of 35% on around £900 million of Russian imports, imposed export bans on high-end luxury goods to Russia, barred Russian ships from the UK, and prohibited Russian aircraft from operating in UK airspace. The government has committed to phasing out imports of Russian oil and oil products by the end of the year, and will work with industry to achieve this smoothly through the newly established Taskforce on Oil. These internationally coordinated sanctions are working. The value of the Russian Rouble plummeted to record lows and remains down by about a quarter of its pre-invasion value against the US dollar, the Moscow stock exchange has been largely suspended since 25 February, and the Central Bank of Russia has been forced to impose capital controls and more than doubled interest rates to 20%. External forecasts expect the Russian economy to go into recession in 2022. The government also welcomes the widespread commitments from firms and investors to divest from Russian assets and urges businesses to think carefully about investments that would in any way support the Russian government.
1.25 Improving productivity is the only way to deliver sustainable economic growth and increase living standards through higher real wages. The government has already taken important steps to meet its commitments to growth and to levelling-up through the superdeduction, the capital uplift and commitment to invest £20 billion per year in R&D (research and development) by 2024-25.
Environment, Food and Rural Affairs spending billions: 2021 4.1 2022 4.2 2023 4.5 2024 4.4 25 4.3
Defence budget: 2021 30.6 2022 31.6 2023 32.4 2024 32.2 2025 32.4
Business and energy its getting around 2.7 billion and then 8.4 billion in 2023?
Pg 23 2.7 Since March 2021, the government has committed to spend over £9.7 billion on decarbonising buildings. This includes £3 billion to upgrade the energy efficiency of up to half a million homes, saving hundreds of pounds in energy bills per year, and £2.5 billion to decarbonise nearly 2% of the total public estate per year.4
2.8 In addition, the government is expanding the Energy Company Obligation to £1 billion per year for 2022-26, requiring energy suppliers to improve the energy efficiency of low-income homes. The government is also developing private rental sector minimum efficiency standards, which are expected to benefit over 2 million households in England and Wales, helping them save on their energy bills and significantly reducing fuel poverty in the private rented sector.
2.13 In addition, in response to fuel prices reaching their highest ever levels, Spring Statement announces a temporary 12-month cut to duty on petrol and diesel of 5p per litre. This measure represents a tax cut of around £2.4 billion over the next year. When compared with uprating fuel duty in 2022-23, cutting fuel duty to this level delivers savings for consumers worth over £5 billion over the next year and will save the average UK car driver around £100, van driver around £200 and haulier around £1,500, based on average fuel consumption.
Significant source of investment on renewable energies?
2.14 To help households improve energy efficiency and keep energy costs down – as well as supporting the UK’s long-term Net Zero ambitions – the government is extending the VAT relief available for the installation of energy saving materials (ESMs).
The government will also increase the relief further by introducing a time-limited zero rate for the installation of ESMs. A typical family having roof top solar panels installed will save more than £1,000 in total on installation, and then £300 annually on their energy bills. The changes will take effect from April 2022. The Northern Ireland Executive will receive a Barnett share of the value of this relief until it can be introduced UK-wide.
2.22 To support the decarbonisation of non-domestic buildings, the government is introducing targeted business rates exemptions for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks with their own rates bill. Spring Statement announces that these measures will now take effect from April 2022, a year earlier than previously planned
3.12 VAT relief for energy saving materials – The government will reverse a Court of Justice of the European Union ruling that restricted the application of VAT relief on the installation of ESMs. This will mean wind and water turbines will be added to the list of ESMs and the complex eligibility conditions will be removed. The government will also increase the relief further by introducing a time-limited zero rate for the installation of ESMs. The changes will take effect from April 2022. The Northern Ireland Executive will receive a Barnett share of the value of this relief until it can be introduced UK-wide
3.13 Green reliefs for Business Rates – At Autumn Budget 2021 the government announced the introduction of targeted business rate exemptions from 1 April 2023 until 31 March 2035 for eligible plant and machinery used in onsite renewable energy generation and storage, and a 100% relief for eligible low-carbon heat networks with their own rates bill, to support the decarbonisation of non-domestic buildings. The government is bringing forward the implementation of these measures and is announcing that they will now take effect from April 2022. Local Authorities will be compensated for the loss of income as a result of these measures and will receive new burdens funding for any administrative and IT costs. Business rates are England only and the devolved administrations will receive Barnett consequential funding in the usual way
‘Annual investment allowance’ 100% capital allowance for the creation of zero emission cars.
Putin mentioned 23 times Russia 23 times Ukraine mentioned 36 times war mentioned 25 times