The Northern Echo by Mike Hughes
Chancellor Jeremy Hunt has been urged to boost the construction of clean energy infrastructure in his Budget on Wednesday.
Pro-growth campaign group Britain Remade is calling on him to permanently drop the factory tax, a move that could boost Britain’s economy by up to 2.5 percent.
Sam Richards, founder and campaign director for Britain Remade, said: “Jeremy Hunt has a choice. He can either take a ‘steady as she goes’ approach and only focus on the bottom line; or he can look to the future, and alongside vital planning reforms, permanently drop the factory tax to boost investment, drive growth and create tens of thousands of jobs, many in Britain’s former industrial heartlands of the North and Midlands.
“Anything other than a permanent change would simply be a furlough scheme for Britain’s anaemic growth over the past 13 years when what we need is a vaccine.
“Britain may not have the same economic firepower as the US, China or the EU, but what we can do is make the country as open to investment as possible through a business friendly tax system and a commonsense planning system. Without action major clean energy projects like Hornsea Three risk being shelved, putting growth and jobs at substantial risk.
“When Jeremy Hunt was appointed Chancellor his number one task was to stabilise the economy and restore confidence. On both fronts he has been successful, now he needs to take bold action to boost growth.”
The group says next month businesses are facing what they describe as a cliff-edge, with Corporation Tax rising to 25% and the 130% capital allowance super deduction on qualifying plant and machinery investments coming to an end.
At the same time, the UK’s growing renewables sector faces increasing international competition for investment. The group is urging the Chancellor to introduce a major expansion of capital allowances - full expensing - to help British industries retain a competitive edge.
Under this system businesses making new productivity-boosting investments in plants, equipment and machinery will be able to write those costs off in full up-front.
According to the Tax Foundation and the Centre for Policy Studies a ‘full fat’ version of full expensing that included structures as well as plant and machinery would boost investment by 4.2 percent, wages by 2.1 percent, and GDP by 2.5 percent in the long run.
A less ambitious version, applying only to plant and machinery, would boost the economy by 0.9 percent, increase wages by 0.7 percent and improve investment by 1.5 percent.
Leading renewable energy developer Orsted, which is developing the £8 billion Hornsea Three wind farm off the East coast, have warned that without changes to the tax system they may have to cancel this massive investment.
Hornsea 3 will be the largest offshore wind farm in the world, capable of generating enough energy to power 3.2m homes. It will be the first customer for the £400m factory currently being built at the Teesside Freeport by SeAH Wind. The factory is creating 1,500 jobs in the supply chain and during construction, plus a further 750 direct operational roles.
But if the Chancellor does not take action when he delivers his Budget next Wednesday, the campaign group says Britain risks being left behind, losing out on investment, growth and jobs.