The Chancellor’s Autumn Statement today announced important measures to encourage investment and sustain business confidence.

The additional £4.7bn in funding for innovation and new technology is particularly important for high skill, high value industries like aerospace, defence, space and security. The focus on improving productivity and supporting innovation sends a strong signal about the government’s commitment to industrial strategy

OVERVIEW

  • Alongside forthcoming Industrial Strategy the Statement prioritised investment to improve productivity
  • Additional investment in innovation and infrastructure – a £23bn fund to be spent over next five years
  • Confirmed no longer seeking surplus in 2019-20, will balance the books asap after 2020, new fiscal rules

R&D

  • Extra £2bn per year for R&D by 2020 (+£425m in 2017/18, +£820m in 2018/19, +£1.5bn in 2019/20) as part of National Productivity Investment Fund – total of additional £4.7bn over next four years
  • This will include an Industrial Strategy Challenge Fund to support collaborations between business and the UK’s science base, managed by Innovate UK and research councils, modelled on USA’s Defense Advanced Research Projects Agency (DARPA)
  • Review tax environment for R&D to look at building on ‘above the line’ R&D tax credit

National Productivity Investment Fund

  • New National Productivity Investment Fund targeted on housing, transport, digital communications, and R&D – extra £23bn between 2017-18 and 2021-22.
  • Invest over £1bn in digital communications – incl £400m new Digital Infrastructure Investment Fund and £700m to support roll out of full-fibre connections and 5G

Business Productivity

  • £13m to support firms’ improve management skills by implementing Mayfield Review

Prison safety

  • £500m for prison safety, justice reform, and recruitment of 2,500 new prison officers – part of the recent Prison Safety and Reform White Paper to improve prison safety and also fund wider reforms to the justice system (read our blog here)

UK Export Finance

  • Doubling of UKEF’s ‘risk appetite’ to £5bn and improve UKEF’s risk management framework (guidance on sustainability of debt, and social and environmental risks)
  • Increase from 10 to 40 overseas currencies in which UKEF can operate in

Patient capital

  • HMT-led review to identify barriers to long-term finance for growing firms and £400m investment in venture capital funds for innovative firms planning to scale up

Local infrastructure

  • £1.8bn for LEPs; mayoral combined authorities powers to borrow for economically productive infrastructure; Northern Powerhouse & Midlands Engine Investment Funds

Other

  • Additional resource to strengthen trade policy capability in DIT & FCO (£26m/yr) and for DExEU to re-negotiate EU relationship (up to £412m over course of this Parl)
  • Changes to business rates and corporation taxes (aligning NICs, restricting interest deductibility, limiting loss relief)

Read our summary of the Autumn Statement for ADS Members here