Jeremy Hunt, the Chancellor of the Exchequer, has announced a £4.5bn funding package to support the manufacturing sector in the UK. This funding is intended to help British manufacturers stay competitive in the global race for investment. The package will benefit various industries including car makers, aerospace, life sciences, and clean energy firms, according to the Treasury.
The government's move comes as countries like the United States and the European Union are formulating major support packages to boost their own industries. Concerns have been raised that without adequate subsidies, Britain could fall behind in attracting investment. Earlier this year, the country witnessed a rise in corporation taxes from 19% to 25%, which was met with opposition from businesses.
While acknowledging that other countries are offering more substantial amounts, Hunt emphasized that the UK would not engage in a global race on subsidies. However, he acknowledged the need to provide targeted support and stated that the government believes subsidies are not the best way to attract investment.
The UK government has already committed hundreds of millions of pounds in support packages to entice multinational companies to invest in the country. For instance, BMW reportedly received a £75m subsidy to manufacture electric Minis in Oxford, and a factory in Somerset making batteries for Jaguar Land Rover electric cars will receive a £500m grant.
The funding package is set to take effect from 2025, coinciding with the start of Whitehall's next spending round. This is aimed at providing firms with the necessary time to plan ahead. The scheme will allocate £2bn for the car industry, £975m for aerospace, £970m for green industries, and £520m for life sciences, with a particular focus on supporting the UK's strongest sectors.
The announcement was made by Hunt during the launch of the package at ITM Power in Sheffield, a UK company that specializes in producing electrolysers, which split water into hydrogen and oxygen. The technology produced by ITM Power is considered crucial in the transition towards hydrogen-based energy and can contribute to the production of green hydrogen when powered by renewable fuels.