Budget generates mixed reaction across industry

London – Despite increased concern over a worsening economic outlook, the process industries found some reasons for encouragement in the Chancellor’s Budget, including, decommissioning tax relief, R&D tax credits and support for shale gas.

Typifying the positive take-ways from George Osborne’s 2013 Budget statement, the Chemical Industries Association was particularly buoyant about moves to support shale gas development.

This could bolster UK energy security and become a significant source a low-cost feedstock for the industry, believes the group, which represents UK chemical and pharmaceutical manufacturers.

“Today’s budget takes further steps to underpin a manufacturing resurgence by supporting shale gas development,” said Steve Elliott, chief executive of the CIA, who also backed an increase in the ‘above the line’ R&D tax credit.

But, cautioned Elliot, “we need more certainty that industry will be fully compensated for spiralling carbon costs. Better still, leave the other electricity market reforms to support the development of low-carbon power.”

“The UK-only element of the Carbon Price Floor is set to double in 2015/16 and this will damage our competitiveness unless the government can fully compensate a broad range of energy intensive activities and guarantee this on a longer term basis so our members can plan with certainty”.

Elsewhere, Juergen Maier, managing director of Siemens Industry UK and Ireland had hoped for more investment in infrastructure projects. The Chancellor’s account of our infrastructure, he said, was seen through “rose-tinted spectacles and actually much more is needed to support energy and transport.”

Maier was supportive of the increased R&D tax credits, commenting: “Ultimately, with the economic climate remaining challenging we need long term support for R&D and an industrial strategy for Britain.”

The most bullish reaction, though, came from the oil & gas sector – not least because of the positive impact of decommissioning tax relief on investment and production.

“The measures announced today will for the first time ever give companies the certainty they need over the tax treatment of decommissioning,” said Malcolm Webb, chief executive of industry association Oil & Gas UK.

“At no cost to the Government, it will speed up asset sales and free up capital for companies to use for investment, extending the productive life of the UK continental shelf,” added Webb.

The Oil & Gas UK leader went on to call for a continuation of this collaboration between industry and the UK and Scottish Governments to support their long-term industrial strategies for this sector.

Environmentalist were less pleased: Friends of the Earth’s head of campaigns Andrew Pendleton declaring: “This is yet another fossil-fuelled Budget that will leave the UK struggling in the wake of forward-thinking nations that are already investing in the clean industrial revolution.

“A few crumbs of comfort for the green economy are dwarfed by his enthusiasm for new oil and gas.”