“Repairing the long-term damage will take time,” said chancellor Rishi Sunak in the House of Commons today (3 March). Describing each one of the 700,000+ jobs lost as a “tragedy”, he announced an extension to the furlough scheme to September. Other measures for businesses included a new loan scheme and a £5bn ‘restart grant’ to help companies get back to work.
There was, however, plenty of opportunity to look to the future, and the budget included some significant announcements for engineering in the UK. Here are four of the key points.
A ‘Big Bang’ for offshore wind
The government aims for offshore wind to generate enough electricity to power every home by 2030, and the budget included announcements to support that. Sunak announced £20m to fund a UK-wide competition to develop floating offshore wind demonstrators, and plans for new port infrastructure to support the next generation of offshore wind projects in Teesside and Humberside.
“This is a ‘Big Bang’ moment for offshore wind manufacturing in the UK, which will drive investment in a globally-competitive domestic supply chain,” said Hugh McNeal, chief executive of trade organisation RenewableUK.
“The government is putting its support squarely behind the kind of strategic approach to securing supply chain investment which the industry has been making the case for during our intensive work with ministers… there is a huge opportunity for UK's offshore wind industry not only to supply UK projects, but also to export to rapidly growing global markets. Today’s new funding for port upgrades and the award of new freeports represent a huge boost to our export ambitions”.
‘Net zero’ ambition
Offshore wind was not the only energy sector to receive a boost. Sunak announced £68m to fund a UK-wide competition for ‘first-of-a-kind’ long duration energy storage prototypes, alongside £4m for a biomass feedstocks programme identifying ways to increase production of crops that can be used for energy.
The government will also issue at least £15bn in ‘green gilts’ to finance critical projects tackling climate change and other environmental challenges, funding important infrastructure investment, and creating green jobs.
In Scotland, the Aberdeen Energy Transition Zone will receive £27m and the Global Underwater Hub will receive £5m, while a demonstration hydrogen hub in Holyhead, Wales, will receive £4.8m.
Overall, however, the budget included less news on climate change and net zero aspirations than last year. As pointed out by Simon Evans, deputy editor of Carbon Brief, ‘climate’ was mentioned only nine times in the full budget documents, compared to 31 times last year.
Opposition politicians criticised Sunak for a lack of ambition. “The chancellor turned his back on the green stimulus that the jobs and climate emergency is crying out for,” said shadow business and energy secretary Ed Miliband.
Chris Jackson, CEO of green hydrogen energy services provider Protium, said: "Protium is disappointed to see that the government has not reflected on the advice from industry, including groups like the UK Hydrogen & Fuel Cell Association, to use this year’s budget to put the UK green hydrogen economy on a solid foundation for growth.”
He added: “Whilst we welcome the foundation of the UK Infrastructure bank in Leeds, this will not provide the scale of investment the UK needs to capitalise on the hydrogen opportunity… we have voiced concerns before around a lack of government ambition and what that would mean in respect of lost momentum, jobs and investment in the UK as other international markets present more engaging pathways for companies in the green hydrogen sector.”
Apprenticeships and traineeships
The cash incentive to firms taking on an apprentice was doubled to a £3,000 payment per hire, while the apprenticeship hiring incentive was extended in England to September. Sunak also announced £7m for a new ‘flexi-job’ apprenticeship programme in England, enabling apprentices to work with multiple employers in one sector.
An additional £126m of support was announced to enable 40,000 more traineeships and fund ‘high quality’ work placements and training for 16-24 year olds in the 2021/22 academic year.
Competitive innovation
From next month, a new ‘super-deduction’ will cut companies’ tax bill by 25p for every pound they invest in new equipment. A promising move for pandemic-hit engineering firms that might otherwise be reluctant to invest, the government predicted it will be worth about £25bn to UK companies over the two-year period it is in full effect.
‘Highly innovative’ companies working in areas including clean tech and life sciences could receive investment from the £375m ‘Future Fund: Breakthrough’.
Elsewhere, Sunak announced the launch of a review of Research & Development tax reliefs to ‘make sure the UK remains a competitive location for cutting-edge research’, and capped the amount of SME payable R&D tax credit that a business can receive in any one year at £20,000, plus three-times the company’s total PAYE and NICs liability.
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