Recommendation 22

HM Government Accepted

A) The UK has significant strengths in battery technologies as set out in the UK Battery Strategy. The UK has a world class research base, including educational and R&D institutions. The UK ranks third in the world in terms of research quality into industrial batteries,6 and is leading work on future technologies such as sodium-ion batteries.7 This is supported by the UK’s leading EV battery start-up ecosystem, with the second highest enterprise value in Europe and fourth worldwide.8 6 Government Office for Science. ‘Rapid Technology Assessment: Novel Batteries.’ 2023. 7 The Faraday Institution. Sodium-ion Batteries: Inexpensive and Sustainable Energy Storage.’ Faraday Insights: Issue 11. 2021. 8 UK Research and Innovation and Dealroom.co. ‘Electric Vehicle Battery Tech in the UK’. 2023. B) The Department for Business and Trade, in collaboration with other departments, is driving innovation to support both current applications and the development of future battery technologies through a range of programmes. C) The Faraday Battery Challenge (FBC) has received £610 million in funding since 2017 to drive innovations from lab to factory through its two key delivery partners;9 the Faraday Institution and the UK Battery Industrialisation Centre (UKBIC). The Faraday Institution brings together 27 UK universities, 85 industry partners and over 500 researchers across 10 major projects covering current and next-generation battery technologies.10 UKBIC, the national manufacturing development centre, provides open-access infrastructure as well as manufacturing and scale-up skills in its 20,000m2 world-renowned facility. UKBIC plays a key role in supporting technology development and de-risking commercialisation pathways for UK battery technologies, helping to remove barriers to firm scale-up and investment. At Autumn Statement 2023, the Government announced an additional investment of £38 million to enhance the Centre’s development facilities and support new entrants to the battery market. D) Secondly, the Department of Business and Trade works closely with Advanced Propulsion Centre (APC). Formed in 2013, it has seen over £1.5 billion of joint industry and Government funding to help the automotive industry meet the challenges of decarbonisation, including through the industrialisation of new battery technologies. The APC recently announced £86.9 million of Government funding to develop cutting-edge technology, including solid-state battery manufacturing.11 The Automotive Transformation Fund (ATF) is a DBT programme that supports companies across the electric vehicle supply chain, including battery developers and manufacturers. The Advanced Manufacturing Plan will provide further support through £2 billion of capital and R&D funding to 2030. E) Thirdly, the Energy Innovation Centre at Warwick Manufacturing Group (WMG) and the Centre for Process Innovation are part of the High-Value Manufacturing (HVM) Catapult, which respectively provide a national facility for research across the R&D process and battery material development, scale-up, and recycling support. These two centres have recently received £12 million of funding for an Advanced Battery Materials Innovation Facility, which will allow for the synthesis, scale-up, formulation, and validation of novel active materials and solid-state electrolytes.12 F) Fourthly, the Government is committed to internationally competitive R&D tax reliefs. Following consultation, the current R&D Expenditure Credit (RDEC) and SME (small and medium sized enterprise) schemes will be merged from April 2024 onwards, simplifying the system and providing greater support for UK companies to drive innovation. Furthermore, the rate at which loss-making companies are taxed within the merged scheme will be reduced. The Government is also making changes to the additional support for R&D intensive SMEs. The 9 UK Research and Innovation. ‘Faraday Battery Challenge.’ 2023. 10 The Faraday Institution. ’About the Faraday Institution.’ 2023. 11 Advanced Propulsion Centre UK. ‘£86.9 million for scale-up and R&D of net-zero vehicle technology’. 2023. 12 Warwick Manufacturing Group. ’WMG in landmark battery development partnership’. 2023. intensity threshold will be reduced from 40% to 30% for accounting periods that start on or after 1 April 2024, allowing around 5,000 extra SMEs to qualify for an enhanced rate of relief, and a one-year grace period will be introduced to provide certainty for companies that dip under the 30% intensity threshold that they will continue to receive relief. Taken together, changes announced at Autumn Statement 2023 will provide £280 million of additional relief per year by 2028-29 to help drive innovation in the UK. G) Finally, university spin-outs are some of our most innovative companies and play a hugely important role for the UK economy. To capitalise on this strength, the Government is accepting all the recommendations of the Independent Review of Spin-outs and setting