Source · Select Committees · Business and Trade Committee
Recommendation 14
14
Accepted
Paragraph: 63
Provide a long-term stable business environment to de-risk investments in the UK battery supply chain.
Conclusion
The UK is competing against other large markets that are offering large subsidies to boost domestic production of electric vehicles and batteries and onshore businesses in the supply chain. The UK Government does not necessarily need to match the scale of subsidies on offer in these markets if the UK’s overall package is internationally competitive. However, the UK Government must provide a long-term stable business environment, with a clear framework of support that de-risks investments in the UK’s battery supply chain.
Government Response Summary
The government claims to have set out a clear framework through the Advanced Manufacturing Plan and UK Battery Strategy, including a £4.5 billion package until 2030, tax cuts such as permanent full expensing for capital allowances, and generous R&D tax relief, to de-risk investments and provide a stable business environment.
Paragraph Reference:
63
Government Response
Accepted
HM Government
Accepted
A) The Government has set out a clear framework to de-risk investments in the UK’s battery supply chain through the Advanced Manufacturing Plan and the UK Battery Strategy, providing a long term, stable business environment. Measures include: a £4.5 billion package to 2030 (announced by the Chancellor on 17 November), tax cuts and business environment measures (Autumn Statement 22 November) and increasing resilience (Battery Strategy 26 November). B) As part of the this, we have announced £2 billion of capital and R&D funding to 2030, boosting the UK’s competitiveness and unlocking strategic investments in our automotive industry. This funding will be delivered via Auto2030, an ambitious programme building on the works of the Automotive Transformation Fund and the Advanced Propulsion Centre R&D programmes, ensuring continuity in HMG support. C) The new programme builds on significant R&D investment and the UK’s clear long-term commitment to zero emission vehicles, including the establishment of the Advanced Propulsion Centre (APC) in 2013 – bringing together £1.5 billion in joint industry and Government R&D advanced propulsion projects34 – and the Faraday Battery Challenge in 2017 – making £541 million of funding available to the UK Battery Industrialisation Centre (UKBIC). D) Auto2030 will unlock investment in zero emission vehicles, batteries and the wider supply chain. It will support the R&D and the commercial scale up of innovative zero emission vehicle technologies. This comprehensive package of interventions includes: • R&D Innovation grants, to develop strategically important zero emission vehicle technologies, boosting the UK’s long-term competitiveness. • Scale-Up grants, to fast-track the development of near-commercial pilots for zero emission vehicle technologies, de-risking future capital investment. • Capital transformation grants, to unlock investments in an internationally competitive zero emission vehicle supply chain, anchoring UK manufacturing. E) Furthermore, the UK Battery Strategy announced a £12 million investment to build the Advanced Materials Battery Industrialisation Centre, a new world- class facility to de-risk and accelerate battery materials scale up in the UK. The UK Battery Strategy also announced an additional £38 million investment to further enhance the capability of the UK Battery Industrialisation Centre (UKBIC), which is the UK’s gigascale battery manufacturing scale-up facility where businesses can de-risk their battery innovation and prove performance of commercially relevant batteries to investors and customers. F) The Government has a strong record of helping the sector to thrive – even in the face of global headwinds. The UK is a global hub for advanced and technology- driven manufacturing, with the fastest productivity growth in the G7 between 2010-2021, and recently overtaking France to become the world’s 8th largest manufacturing nation. The Government is committed to ensuring the UK’s business environment is competitive. As well as maintaining the lowest headline rate of corporation tax in the G7 at 25%, the UK is the only G7 country to have announced permanent Full Expensing of capital allowances. Companies can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments. The UK also has the joint highest uncapped headline rate of R&D tax relief for large companies in the G7.