Jeremy Hunt’s plans to increase investment in the country’s renewable energy sector and electric vehicle industry have been welcomed by companies as a much-needed boost.
But some experts have suggested the measures might not be enough to generate the level of investment needed in green projects when compared to the recent US and European green deals.
Hunt today confirmed a £4.5bn spending package for the UK’s manufacturing sector, including the aerospace, automotive and life sciences industries.
Around £2bn will be issued to support the transition to zero-emission vehicles, just under £1bn (£970m) will be made available for the aerospace sector’s push toward zero emissions, and some £520m will be set aside for the life sciences sector.
Hunt said: “These targeted investments will make sure the UK remains competitive in sector’s where we are already leaders and innovative in sectors where we are not.”
Additional new funding of £960m was also unveiled for growing the country’s renewable energy sector, covering offshore wind, nuclear and hydrogen and improving the UK’s electricity network.
The automotive sector said the decision to make the so-called full expensing policy permanent, which gives firms tax breaks for investing cash into their firms, was crucial to boosting investment needed to transition to electric vehicles.
“The Chancellor’s commitment to permanent full expensing is very welcome as, without incentives for the automotive sector to invest, building battery capacity for the UK’s much-heralded transition to electric vehicles becomes that much harder to achieve,” Ian Plummer, commercial director at Auto Trader, said.
“Producing batteries at home will also bring down the cost of electric vehicles for consumers which is critical as the current upfront cost of the cars is stifling any meaningful levels of adoption,” he added.
The £2bn earmarked in grants and loans for the automotive industry should also help the sector “get more bang for their buck,” he added.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said: “The attractiveness of the UK will be bolstered by permanent full expensing and, given the importance of decarbonising the market and manufacturing, speeding up grid access.”
The multi-billion pound automotive funding was also welcomed by carmakers Nissan and Toyota, the former of which is building a giant battery plant in Sunderland.
Responding to the Chancellor’s Autumn Statement, Alistair Phillips-Davis, the chief of energy giant SSE, said: “As one of the biggest investors in the UK, we welcome the Chancellor’s focus on encouraging business investment, speeding up the time it takes to build major projects and looking at how communities hosting clean energy infrastructure receive tangible benefits.”
But some analysts have suggested that today’s announcements don’t go far enough to solidify the UK’s position as an attractive investment prospect for green projects.
“With business leaders, most politicians and the public alike seeing clean as the next big thing, and with the US, EU and China already powering ahead, does this risk looking too little, too late?” Peter Chalkley, director at the Energy and Climate Intelligence Unit, said.
“The government will likely need to do more in the coming months to calm investor nerves. Things over the past few months have looked, to say the least, a little confused,” he added.
Simon Virley, head of energy and natural resources at KPMG UK, said while the plans are welcomed, Britain may need more to boost its overseas appeal.
“While these are important steps to build confidence for investors in the energy transition and address some of their concerns, we need to look at how this stacks up globally,” he said.
“If this is the long-awaited response to the Inflation Reduction Act, and other support packages such as the EU’s Green Deal Industrial Plan, then fiscally it falls short of the $379bn on offer in the US,” he said. “We are in a global race for green investment so we cannot be complacent and rely on past progress to entice global investors to the UK.”
Jonathan Maxwell, chief executive of Sustainable Development Capital, said that “while the proposed connection reforms are welcome, time will tell whether the ambition to reduce grid access delays by 90 per cent is realistic.”
“Overall, we welcome many of the announcements on energy. They just don’t go far enough.”