The 2023 Budget offers pluses and minuses for industry and manufacturing. First of all, Mr Hunt has stood by his decision to raise the rate of corporation tax from 19% to 25% in April, despite opposition from the his backbenchers.
More positively, Mr Hunt announced a new policy of ‘full expensing’ for businesses, meaning every pound invested in IT equipment, plant and machinery can be deducted “in full and immediately” from taxable profit. This is a three-year policy, but Mr Hunt said he wanted to make it permanent eventually at a cost of £9 billion a year.
In a hugely significant long-term step for energy security, the Chancellor confirmed that nuclear energy will be classed as environmentally sustainable, meaning it will have the same access to subsidy and support as other forms of renewable energy generation. The Chancellor said this will give nuclear power the same “investment incentives” as renewable energy and will driver further public investment.
Mr Hunt also announced the launch of Great British Nuclear, a body that will help energy companies find suitable sites for nuclear power plants and develop crucial supply chains. Meanwhile, the Government is to launch an open competition for small modular reactors (SMRs).
However, the lack of extension of support for energy costs will cause concern. Stephen Phipson, CEO of Make UK to say: “Given the limited headroom the Chancellor had, his pursuit of continued stability and reassurance is understandable. Within this he was right to focus on significant measures to boost investment and the welcome support for childcare. Companies will be disappointed, however, that there is no extension of support for energy.”
More positively, Beatrice Barleon, Head of Policy & Public Affairs at EngineeringUK said: “We welcome the Government’s ongoing commitment to make the UK a science and technology superpower and the ambitions of growing the economy, meeting our Net Zero targets, and unlocking the potential of every region. We also welcome the acknowledgement that to achieve this, businesses urgently need a larger skills and workforce base.”
