Autumn 2017 budget delivers indirect benefits for shipping
Chancellor Philip Hammond today delivered his Autumn Budget speech, announcing a range of measures of interest to the UK shipping industry.
The Chancellor opened by announcing an extra £8 billion in new funding for the UK’s economic infrastructure.
“Last Autumn I launched the National Productivity Investment Fund to provide an additional £23 billion of investment over five years to upgrade Britain’s economic infrastructure for the twenty-first century,” Hammond said his speech before the House of Commons. “Today I can announce that I will extend this fund for a further year and expand it to over £31 billion.”
The Government will allocate a further £2.3 billion for investment in R&D and will increase the main R&D Tax credit to 12%. The Chancellor said the move represents “taking the first strides towards the ambition of our Industrial Strategy to drive up R&D investment across the economy to 2.4% of GDP”.
Over £1 billion of discounted lending will be made available to local authorities across the country to support high-value infrastructure projects, the Chancellor said.
The Government is already investing £300 million to ensure HS2 infrastructure can accommodate future Northern Powerhouse and Midlands Engine rail improvements.
The investment is part of what the Chancellor called “the biggest rail programme since Victorian times” and “the largest road building programme since the 70s”. The Government has committed to building up to 1 million new homes in the Cambridge-Milton Keynes-Oxford corridor by 2050, which it is hoped will be supported by the new road and rail infrastructure.
Any investment in infrastructure is to be welcomed, but the UK Chamber says attention should also be paid to the nation’s ports and improving capacity on the road and rail arteries that service them.
The UK Chamber has already raised its concerns that “hard” Customs borders could result in debilitating congestion at ports on both sides of the Channel, which would back up on to road links.
The Autumn Budget allocates a further £3 billion to ensure that the Government can continue to prepare effectively for the UK’s exit from the European Union.
The funds will be paid in two tranches of £1.5 billion that will be made available during 2018-19 and 2019-20 respectively.
“I stand ready to allocate further sums if and when needed. No one should doubt our resolve!” Hammond said.
Nearly £700 million of additional funding has been provided to date as the UK approaches Brexit.
The UK Chamber welcomes this ready supply of funding and is calling on Government to invest heavily in improving road and rail access to the UK’s major ports to ensure national transport infrastructure is fit for purpose ahead of Brexit.
Hammond’s speech also outlined potential new plans to use taxation to reduce plastics waste, following on from the existing plastic carrier bag charge.
“Now I want us to become a world leader in tackling the scourge of plastic, littering our planet and our oceans,” the Chancellor said.
“With My Right Honourable Friend the Environment Secretary, I will investigate how the tax system and charges on single-use plastic items can reduce waste - because we can’t keep our promise to the next generation to build an economy fit for the future unless we ensure our planet has a future.”
The Government will launch a call for evidence in 2018, seeking views on how the tax system or charges could reduce the amount of single-use plastics waste.
Separately, Hammond also announced the provision of £220 million for a new Clean Air Fund, in support of the National Air Quality Plan published in July.
“The tax system can play an important role in protecting our environment,” Hammond said in his speech before the Commons. “We owe it to our children that the air they breathe is clean.”
The Clean Air Fund will allow English local authorities that have the most challenging pollution problems to help individuals and businesses adapt as measures to improve air quality are implemented.
Reducing pollution from plastic waste and improving air quality are objectives worthy of increased spending, in the UK Chamber’s opinion. Fiscal support from the Government in achieving these aims is a critical step in the right direction.
Hammond’s goals are aligned with the UK Chamber’s recently launched Environmental Resolution. The document calls on shipping companies to prevent sea pollution from plastics, oil and other harmful discharges from sea-going vessels, and minimise their greenhouse gas emissions in order to reduce the impact on the environment and on human health.
North Sea tax arrangements
From November 1st, 2018, the Government will introduce ‘Transferable Tax History’ for transfers of oil and gas fields in the North Sea.
The Chancellor called the move “an innovative tax policy that will encourage new entrants to bring fresh investment to a basin that still holds up to 20 billion barrels of oil”.
The Government will also launch a technical consultation on allowing a deduction to petroleum revenue tax for decommissioning costs incurred by a previous licence holder, which will support transfers of assets where the seller retains the decommissioning liability.
It is hoped that this move will raise £25 million per year in tax revenue by 2023, according to the Budget 2017 document.
The UK Chamber of Shipping believes that, although the issue remains complex, the policy will bring new investment to the North Sea basin, which will ultimately benefit the UK’s offshore support vessel sector and marine services.
The move shows Hammond has listened to the country's oil and gas industry – the new policy comes subsequent to feedback from an expert panel that in March was called in to consider reforming the tax system.