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- Chancellor of the Exchequer, Rachel Reeves MP, delivered the Autumn Budget “Fixing Foundations to Deliver Change” to the House of Commons on 30 October.
- Aerospace, Defence, and Advanced Manufacturing investment was secured through £24 billion-plus of funds.
- Infrastructural challenges in the region could hamper growth if action is not taken through localised representation to ensure investment in the South West.
This Budget’s overarching aim was to Rebuild Britain. With multiple leaks to the press on its content, the Chancellor highlighted Investment with a number of funding pots dedicated to Aerospace, Defence, and Advanced Manufacturing. If the last Labour Government started the drumbeat of Education, Education, Education – the current Government is banging the drum on Invest, Invest, Invest.
However, the education element from a South West perspective will need to be on the joining of the dots between Place and Funding. This will be achieved through listening to industry on the best way to maximise growth through investment in technologies and looking further than cities when it comes to spending.
In summary, there is a 2.5% increase in defence spending totalling £2.9 billion, and this could have significant benefit to areas like Devonport, Portsmouth, and Yeovil. It is evident that there needs to be clearer regional infrastructure support and a requirement for localised investment in technology to enhance productivity. This can be achieved through a unified regional voice to ensure effective representation of the South West’s interests.
What did it say?
The overall narrative was to ensure public investment gets Britain moving. Corporation Tax has not been impacted with the rate constant at 25% for businesses generating profits more than £250,000. Companies which make profits of between £50,000 and less will pay the small profits rate of 19%. For National Insurance Contributions, the employer rate will rise to 15% from April and increases to the Minimum and Living Wages will take effect in 2025 too. The Chancellor stated that public investment will spur regional growth and innovation; this was highlighted through the delivery of £20.4 billion in 2025-26 towards R&D.
The emphasis on Place was reiterated, further to the Industrial Plan green paper Invest 2035, “To support growth, including in our rural areas, we will proceed with city and growth deals in Northern Ireland, in Causeway Coast and Glens, and the Mid South West.” WEAF is pleased to note the mention of the South West, but any growth support of funding must be directed north, south, and east, west of the region, not just to the major cities.
The UK Shared Prosperity Fund has secured again £900 million of funding, this is in advance of wider local growth funding reforms. The Budget committed further that the Long-Term Plan for Towns will be maintained and remodelled into a new regeneration programme.
WEAF welcomed the unlocking of investment in the UK’s advanced manufacturing sector, which included £975 million signposted for aerospace. This funding will fuel R&D in innovative aerospace technologies and zero-emission car manufacturing, which, in, turn, will bolster the entire supply chain.
Further to the Labour Party’s manifesto, an allocation of £2.9 billion of additional total funding to the UK Ministry of Defence will see the defence budget grow by 2.3% per year on average in real terms. The measure has clearly been influenced by the current geopolitical climate to strengthen the Armed Forces and safeguard national security.
Moreover, an area of interest for the South West is UK Export Finance, the Government’s export credit agency, has been given the ability to offer financial support to UK companies that supply critical minerals to UK exporters, in areas such as EV battery production, clean growth, aerospace, and defence. This is to enhance the Government’s Net Zero objectives and build supply chain resilience.
Following on from Net Zero, which featured heavily within the Budget, there was a strong emphasis on the UK becoming a clean energy superpower as a leading factor on the country leading the way with sustainability and resilience.
This has been further emphasised through the reversal of the ban on onshore wind in England, as the Government thinks this area will deliver cheap, dependable, and clean energy across the country. There has been the approval of four major solar projects of 2GW which will create jobs, and the securing of £34.8 billion of private investment into the UK’s clean energy industries.
HM Treasury has also announced that efforts are underway to transform the Apprenticeship Levy into a flexible Growth and Skills Levy, which is supported by £40 million investment. This funding aims to facilitate the creation of shorter apprenticeships. The revised levy will be co-developed with input from both employers and learners. Skills England will lead this initiative and consult with partners to ensure optimal value for money.
What didn’t it say?
The A358 dualling of Taunton to Southfields has been scrapped by the Transport Secretary. This move is disappointing as it paralyses logistical connections between the South West with London and the South East – the A358 is as an important corridor for industry in the region to transport goods and services.
In an interview on the day of the Budget, WEAF’s CEO Colin Turner spoke with BBC Radio Somerset on the subject and said: “I am sure if we make representations, then we can make tweaks to the infrastructure that will helps us. But in the long term, if you are looking at, say, the Gravity site, and you are going to move batteries from Bridgewater into the main JLR sites at Coventry and into Liverpool. You must get the batteries from A to B. Now that is either by road or by rail. So, we must have some logical thinking in terms of the infrastructure against where key investment is made, otherwise you lose the value. What will happen is you will not be able to produce [technologies] and business will say, it is not working, and we are going to move.”
What does WEAF say?
There is real importance on infrastructure and the need for practical solutions to support business growth within the region. There needs to be a unified voice in the region from our regional MPs to a body that can influence delivery of funding to counties across the South West, not limited to or exclusively for the cities.
This is a new Government so it will be interesting to see how these initiatives become reality. Whilst aerospace might have a buoyant future, based on the Budget, there are still some short- term storms raging. For example, WEAF would like to see localised investment into technology robots to help plug the skills gap, increase productivity through digital systems and robotics to reduce workload. This can be funded through some of the R&D monies into SMEs, this will enable smaller businesses within the region and beyond to become more competitive.
Colin Turner, CEO of WEAF, commented: “WEAF is pleased to hear the Chancellor continue the Government’s narrative on the importance of Growth. This was emphasised today through the commitment of £20.4 billion investment in R&D over the next two years and £2.9 billion of additional total funding to the UK MoD. For WEAF’s membership, we were pleased to hear support for Advanced Manufacturing as an essential sector to unlock investment opportunities across the UK, with a notable commitment of £975 million specifically allocated to the aerospace sector. WEAF will work tirelessly to engage with Government stakeholders to ensure promises of funding allocations to the South West in these areas.”
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About WEAF:
WEAF is the trade association for all companies operating in the Aerospace & Defence sector in the South West.
As one of the largest aerospace and advanced engineering clusters in Europe, we can provide a strong voice for our members, as well as representation and access to prominent regional, national, and international decision makers in industry and government.
By providing support and new opportunities for our members, we strive to improve efficiency and effectiveness in the supply chain and bring stakeholders together to create one cohesive community.