UK Chancellor announces money for SMEs and school science but abolishes biofuel subsidy

The UK government’s 2008 budget sees small businesses and school science netting extra funding, while the Chancellor, Alistair Darling, also announced several new environmental targets designed to boost renewable energy use. 

A raft of measures to help SMEs access financing are listed in a new Enterprise Strategy, published alongside the budget. Lending and funding to SMEs will be extended, with a 20 per cent increase in the Small Firms Loan Guarantee Scheme, a ?25 million fund to support businesses led by women, and a ?30 million mezzanine finance provision to help existing firms expand. Innovation vouchers will encourage small firms to work with universities, and through the National Council for Graduate Entrepreneurship establish university enterprise networks. 

The government will review the barriers to SMEs winning more government contracts, with a target that 30 per cent of government procurement comes from SMEs. An improved Small Business Research Initiative (SBRI), designed to help SMEs gain greater access to publicly funded R&D contracts, is to be rolled out in 2009. 

School science support   

While many of the government’s plans for science will not be revealed until March 13, with the publication of ’Innovation Nation’, the Science and Innovation White Paper, the March 12 budget did include a boost for science teaching in schools. 

In partnership with the Wellcome Trust, Darling says the government will invest ?10 million over five years into ’Project Enthuse’, to support the professional development of science teachers, taking the project’s entire budget to ?30 million. 

’The announcement of a ?30 million Enthuse Science fund is an excellent start but it should be borne in mind that this only equates to around ?10,000 per secondary school, said Andrew Furlong, director of policy at the Institution of Chemical Engineers. ’Whilst this extra funding will serve as a real boost for passionate science teachers, there simply aren’t enough of them and chemical engineers are calling for premium salaries for science and maths teachers, and a major award scheme to reward the very best.’ 

Scientific charities including the Wellcome Trust will benefit Darling’s Gift Aid announcement. The government currently gives charities the income tax paid on any donations they receive, but from this year the basic rate of income tax drops from 22 to 20 per cent. The government has announced it will continue to pay Gift Aid at 22 per cent until 2011, which Darling estimates will provide charities with an extra ?300 million. 

Cuts to carbon   

From 2009, the government will publish a five year carbon budget alongside its fiscal budget, Darling said. The UK’s long-term goal to reduce CO2 emissions by 60 per cent by 2050 may - after consultation with the government’s climate change committee - be increased to 80 per cent to meet international agreements, the Chancellor said.     

Darling also said he wants large electricity producers to have to buy 100 per cent of their Emissions Trading Scheme (ETS) allowances by auction, if there is scope in the current EU directive to do so, in order to encourage investment in less carbon-heavy power-generating technologies. In addition to the competition to build the UK’s first Carbon Capture and Storage (CCS) plant launched in November 2007, there will be a new call for firms to demonstrate components of CCS systems.

In summer 2008 the government plans to launch a full consultation on ways to increase renewable energy use. Darling also plans to change taxation of biofuels, replacing biofuel duty with the Renewable Transport Fuel Obligation in order to selectively incentivise only the most sustainable biofuels. In effect, this means that biodiesel will no longer be eligible for a rate of duty that is 20p per litre lower than low-sulphur diesel. Instead, fuel producers will have to ensure that 5 per cent of their fuels are from renewable sources - or face fines.

The government has already stated that all new homes built from 2016 will produce zero net carbon; Darling has now said that the exact definition of a ’zero-carbon’ home will be set out by the end of 2008. Darling now also aims to extend this to apply to new non-domestic buildings from 2019, with progress to be reviewed in 2013. 

The Chancellor also stated that the government will legislate to introduce a charge on single-use carrier bags, if retailers fail to voluntarily introduce charges themselves by the end of 2008. 

However, the Royal Society’s Director of Public Affairs, Peter Cotgreave, was unimpressed with the environmental initiatives in the budget. ’Those who had predicted a "green" budget unfortunately got it wrong,’ said Cotgreave. ’The Chancellor had much to say on green issues but actual action was thinner on the ground. It is to be hoped the budget is only a small part of Government plans to genuinely tackle major problem areas such as transport and energy.’

James Mitchell Crow