Yesterday (27th October), Chancellor Rishi Sunak delivered his Autumn Budget and Spending Review.
The review sets out the Government’s individual Budget commitments as well as three-year spending allocations for the various Government departments, with the Department for Environment, Food & Rural Affairs (DEFRA) and the Department for Business, Energy & Industrial Energy (BEIS) seeing an increase in spending allocation.
Overall, much of the planned spending and tax measures have already been announced, with the most notable of these the increase to employee National Insurance Contributions. Of note, the Levelling Up White Paper that was expected to be published yesterday, detailing how the priority ‘Levelling Up’ agenda will be delivered, was not published and appears to have now slipped to the end of the year.
Read on for some key points from yesterday's announcements:
- OBR forecasts economic growth for 2021 of 6.5 per cent, with the economy forecast to return to pre-Covid levels by 2022.
- COVID-19 ‘scarring’ assumption revised down to 2 per cent.
- OBR expects unemployment to peak at 5.2 per cent.
- Business investment forecast revised up over next five years.
- Borrowing as percentage of GDP forecast to fall from 7.9 per cent this year to 3.3 per cent next year.
- New Charter for Budget Responsibility with new fiscal rules.
- Inflation in September 3.1 per cent and is likely to rise to average 4 percent over next year.
Headline Spending Commitments
- Grants worth £1.4 billion will be given to "internationally mobile" companies to invest in UK infrastructure.
- £5.7 billion of investment over five years in eight City Regions, including West Yorkshire, Greater Manchester, Liverpool City Region and the Tees Valley, through City Region Sustainable Transport Settlements.
- £24 billion earmarked for "a multi-year housing settlement" - £11.5 billion of this to build up to 180,000 new affordable homes.
- Increasing public R&D investment to £20 billion by 2024-25.
£3.8 billion will be invested in skills, an increase of 48 per cent over the course of this parliament. £1.6 billion over three years to roll out T-levels, and £550 million for adult skills in England. £830 million for modernising colleges in England.
- £240 million for the Net Zero Hydrogen Fund and £1 billion for the Carbon Capture Usage & Storage (CCUS) Infrastructure Fund.
- £1 billion Net Zero Innovation Portfolio accelerating near-to-market low-carbon technology innovations.
- £416 million of UK-wide R&D funding for programmes to help commercialise low and zero emission transport technologies, including trials of three zero emission HGV technologies.
- Additional £620 million for public charging in residential areas and targeted plug-in vehicle grants.
- £180 million is provided to kick-start the development of commercial-scale UK sustainable aviation fuel (SAF) plants and a SAF clearing house to test and certify new fuels.
- £450 million to grow the heat pump market in England and Wales as part of the ambition to work with industry to reduce the costs of heat pumps by 25-50% by 2025.
- Support for heat networks in England with £338 million to encourage private investment. These measures will help meet the government’s target of installing 600,000 heat pumps per annum by 2028.
- Funding to implement free, separate food waste collections in every English local authority from 2025, supporting the near elimination of biodegradable municipal waste to landfill by 2028. The number has not been confirmed but this was outlined to be £295m within the Net Zero Strategy published earlier this week.
- HGV Levy: Suspended HGV levy until 2023, and frozen VED for heavy goods vehicles.
- Vehicle Excise Duty (VED): The government will uprate VED rates for cars, vans and motorcycles in line with RPI from 1 April 2022.
- Company vehicles: From 6 April 2022, the van benefit charge and the car and van fuel benefit charges will increase in line with CPI.
- Fuel duty rates: The government will freeze fuel duty UK-wide in 2022-23. This is the twelfth consecutive year of the freeze, cumulatively saving the average UK car driver £1,900 compared with the pre-2010 escalator.
Second-hand Motor Vehicle Export Refund Scheme: The government will legislate to be able to introduce a Second-Hand Motor Vehicle Export Refund Scheme. Under such a scheme, businesses that remove used motor vehicles from Great Britain for resale in Northern Ireland or the EU may be able to claim a refund of VAT following export. This will ensure that Northern Ireland motor vehicle dealers will remain in a comparable position as those applying the VAT margin scheme elsewhere in the UK.
- National Living Wage (NLW) and National Minimum Wage (NMW): Increased from £8.91 to £9.50 an hour, effective from 1 April 2022.
- High-Skilled Migration: Changes to the UK’s immigration system to attract highly-skilled people to the UK. This includes a new Scale-up Visa, launching in spring 2022, that will help the UK’s fastest-growing businesses to access overseas talent. The visa will be open to applicants who pass the language proficiency requirement and have a high-skilled job offer from an eligible business with a salary of at least £33,000.
- Carbon Price Support (CPS) rates for 2023/24: The government will continue the freeze on Carbon Price Support rates to maintain a cost of £18 per tonne of carbon dioxide in Great Britain from 2023-24.
- Aggregates Levy: The government will freeze the Aggregates Levy rate for 2022-23 but intends to return to index-linking in future.
- New National Infrastructure Commission (NIC) Surface Water Flooding Study – The government will commission a new NIC study, to report by November 2022, on the effective management of surface water flooding in England. This will assess the current approaches to managing surface water and consider the role of a range of interventions including both traditional built infrastructure and nature-based solutions.
- Research and Development (R&D) tax reliefs – Following the consultation launched at Spring Budget 2021, R&D tax reliefs will be reformed to support modern research methods by expanding qualifying expenditure to include data and cloud costs, to more effectively capture the benefits of R&D funded by the reliefs through refocusing support towards innovation in the UK, and to target abuse and improve compliance. These changes will be legislated for in Finance Bill 2022-23 and take effect from April 2023. Further details of these changes and next steps for the review will be set out as part of the government’s further tax administration and maintenance announcements later in the autumn.
As the country focuses on building back better post-pandemic, this Budget was particularly crucial for our government. Amongst other things, it presents many opportunities for businesses to capitalise on funding for projects including hydrogen and carbon capture.
Get in touch to find out how Veolia can support you to invest in new green projects.
Change, in particular environmental change, requires collaboration. Veolia's new initiative, '+1', brings together 50 key stakeholders, to create a collective driving force to power the ecological transformation.
With carbon reduction firmly on the environmental agenda, it can be mind-boggling navigating the world of related buzzwords. With this in mind, we've put together an A-Z guide of key terms and how Veolia can help your business meet its carbon reduction targets.