Greenbackers Investment Capital is pleased to join Cleantech for UK, a leading advocacy body representing a powerful coalition of 12 company builders and investors, spanning the innovation lifecycle—from start-ups to established IPOs. This diverse group is united by a commitment to advancing Britain’s clean and sustainable growth across critical industries such as manufacturing, construction, transport, and agriculture. As the government seeks to kickstart economic recovery, Cleantech for UK is at the forefront of promoting innovative technologies poised to create thousands of jobs and significantly boost productivity nationwide. Greenbackers is proud and commited to adding its voice to it.
The Autumn Budget had plenty of anticipation, with more than a few guessing games leading up to it—plus that unexpected tangle over who exactly qualifies as a “working person,” which set tongues wagging before the Chancellor even took to the despatch box. Then, in the Budget’s wake, the Chief Secretary to the Treasury found himself in the hot seat at the BBC, questioned over whether Labour’s tax tweaks might be toeing the line on manifesto promises. For cleantech entrepreneurs and investors, it’s a bit of a mixed bag: while there’s some continuity in corporate tax rates and a nod to electric vehicles, higher capital gains taxes and pared-back business reliefs mean there’s plenty to mull over.
Policy Summary for Cleantech Investors and Entrepreneurs
The UK’s 2024 Autumn Budget focuses on strengthening the economy through sustainable fiscal measures and strategic public investment. This includes policies aimed at protecting key public services, controlling spending, and supporting business and energy sector transitions. Cleantech for UK has prepared a brief overview highlighting both the positive aspects and potential challenges for cleantech companies and investors:
1. Economic and Fiscal Stability: New fiscal rules, including a balanced budget for day-to-day spending and an investment rule for public sector debt, aim to create a predictable environment conducive to long-term growth.
2. Increased National Insurance Contributions (NICs): Employer NICs will rise from 13.8% to 15%, with the Secondary Threshold reduced to £5,000. The Employment Allowance will increase from £5,000 to £10,500.
3. Capital Gains Tax (CGT) Increases: CGT rates will significantly increase to a lower rate of 18% and a higher rate of 24%.
4. Public Services and Infrastructure Investment: An additional £100 billion in capital investment over five years will focus on transport, housing, and R&D.
5. GB Energy and National Wealth Fund: GB Energy will receive £100 million for clean energy projects in 2025-26 and £25 million to establish its headquarters in Aberdeen. The National Wealth Fund will support GBE’s initial investments, leveraging its resources and project pipeline. However, there are limited further details about NWF despite it being mentioned 10 times.
6. Infrastructure Development: Commitment to upgrading infrastructure, including transport and housing, will create opportunities for cleantech solutions.
7. Investment in Clean Energy: Significant financial allocations for carbon capture, nuclear energy, and hydrogen production highlight the government’s commitment to the clean energy transition.
8. Support for Green Transition:
- Energy Profits Levy (EPL): Increased from 35% to 38% for oil and gas companies until 2030.
- Electric Vehicle (EV) Incentives: Extended 100% first-year allowances for EV charge points and zero-emission vehicles.
- Aerospace Support: Continuation of the Advanced Fuels Fund to promote sustainable aviation fuel.
- Tax increases on flying: Time to give up the private jets as they are now subject to a 50% increase in duty.
- Carbon Boarder Adjustment Mechanism: This has been confirmed for 2027.
- Hydrogen: Support for the first round of electrolytic hydrogen production contracts.
- Reconfirming early wins: On technologies like Carbon Capture and Storage and enabling market mechanism like the Contracts for Difference uplift.
However, alongside these green initiatives, the government has again frozen fuel duty. While this move aims to alleviate cost-of-living pressures, it signals the challenges the Government are facing in balancing short-term affordability with long-term green transition goals.
Analysis of Impact on Cleantech Companies and Investors
Economic and Fiscal Stability. The welcomed introduction of fiscal reforms is expected to foster a more stable and predictable environment for investment. This stability could boost private sector confidence, potentially leading to increased investment in cleantech companies. However, the increased NICs will put pressure on operational costs, making companies hesitant to expand their workforce and accelerating capital burn rate. This could lead to slower growth as businesses adjust to higher employee costs, potentially necessitating larger investments to maintain growth trajectories.
Business and Investment Taxes. The significant increase in CGT rates could deter investors from realising gains, particularly in higher-risk sectors like cleantech. This may limit available funding for innovative ventures and alter the exit strategies of entrepreneurs. Investors may need to adjust their strategies to accommodate the higher tax environment, which could slow the pace of investment into cleantech projects.
Public Services and Infrastructure Investment. The government’s commitment to an additional £100 billion in capital investment, particularly in transport, housing, and R&D, represents a significant opportunity for cleantech startups. Increased spending on infrastructure could lead to the adoption of cleantech innovations, especially those focused on energy efficiency and sustainable construction. It could also lead to increased productivity, health and well-being for staff.
Support for Green Transition. The increased EPL on oil and gas companies could further drive investment towards cleaner technologies as companies look to diversify. The continuation and expansion of EV incentives are likely to bolster the market for electric vehicles and related infrastructure, presenting a fertile ground for investment in these areas.
GB Energy, National Wealth Fund and Infrastructure Development. The UK government’s £100 million commitment to GB Energy, supported by the National Wealth Fund (NWF), presents new opportunities for cleantech firms and investors. For cleantech companies, this funding and focus on infrastructure provide avenues to scale innovations. For investors, government backing lowers risk, encouraging capital into clean energy. While details on NWF’s broader role remain limited, its potential to co-invest could further leverage private funds, bolstering growth across the UK’s cleantech sector.
Investment in Clean Energy. Significant allocations for carbon capture, nuclear energy, and hydrogen production signal a strong governmental commitment to the clean energy transition. This creates a robust market for cleantech firms operating in these sectors, facilitating access to funding and partnerships.
Overall, while the budget introduces challenges such as significant increases in taxes and NICs, it also lays a foundation for significant investment opportunities in the cleantech sector, particularly through government infrastructure spending, support for green transitions, GB Energy and the National Wealth Fund.
