UK Budget Summary March 11 2020

13 March 2020

On March 11th, 2020, UK Chancellor Rishi Sunak delivered a post-Brexit budget which contained a significant increase in spending across multiple departments with a total increase in borrowing of over £125 billion.  Here is a summary of the budget policy decisions published by the UK government  in the sectors which are of relevance to OBM and our clients. 


Export & Trade Policy  

With a view to implementing an independent trade policy at the end of the Brexit transition period, the government announced several policy decisions to support UK exporters and to attract international investors.  These include: 

  • Funding of £8 million announced for the pilot of a Digital Trade Network (administered by DIT and DCMS) in the Asia Pacific region which will help UK companies access opportunities in these markets.  
  • Additional funding for UK Export Finance (UKEF) with the provision of an additional £2 billion lending facility for clean growth projects and additional £1 billion to support overseas buyers of UK defence and security goods and services. 


Science and Technology  

Science and technology are seen by the government as key future drivers of the UK economy, and as a consequence research and development spending will increase to £22 billion per year by 2024-25.  Areas of investment include: 

  • An £800 million investment for a new research agency, similar to the Defence Advanced Research Projects Agency in the USA, which will fund blue skies research. 
  • £900 million will be provided to fund UK businesses working in key technology and sectors, including nuclear fusion, space, electric vehicles, and life sciences. 
  • Mathematics research will receive £300 million between 2020-21 and 2024-25. 
  • Defence R&D gets an additional £100 million for developing new technologies in aviation and space propulsion. 
  • Animal health science will get an investment of £1.4 billion to fund research into current and emerging animal diseases. 


Energy sector: decarbonising power, industry and heat 

A number of policy decisions were presented in the budget with regards to the UK meeting its carbon net zero target. 


The changes to the tax regime related to energy production include: 

  • The government is removing the incentives to use gas over electricity by increasing the gas rates under the Climate Change Levy (CCL).  The rate on gas is being raised to £0.00568/kWh in 2022-23 and to £0.00672/kWh in 2023-24 whilst the rates on electricity are unchanged. 
  • Support for energy-intensive businesses to operate in a more environmentally sustainable manner with an extension of the Climate Change Agreement (CCA) scheme by two years.  The CCA is a target-based scheme which allows businesses to reduce their CCL bills. 
  • The Carbon price support (CPS) rate will be maintained at £18t/CO2e in 2021-22 to encourage decarbonisation of the power sector. 
  • A continuation of ‘ambitious’ carbon pricing after the Brexit transition period ends on 1 January 2021was announced.  Preparation for a UK Emissions Trading System (ETS), which could be linked to the EU ETS will begin with new legislation being announced in 2020.  Consultation on a carbon emissions tax as an alternative carbon pricing policy will begin in 2020. 

Measures to help decarbonise power, industry and heat announced in the budget include: - 

  • A new Carbon Capture and Storage (CCS) Infrastructure Fund of £800 million to support the establishment of CCS in at least two UK sites, one by the mid-2020s and a second by 2030.  
  • The government will support the construction of the UK’s first privately financed gas CCS power station by 2030 using consumer subsidies. 
  • Consultations will begin on introducing a grant scheme from April 2022 to encourage SMEs and domestic users to invest in heat pumps and biomass boilers.  This will be supported by £100 million of government funding. 
  • The Renewable Heat Incentive (RHI) will be extended until 31 March 2022 and will be augmented with the addition of flexible tariff guarantees to the Non-Domestic RHI in order to provide investment certainty for renewable heat projects. 
  • Investment in heat networks will continue.  The current Heat Networks Investment Project will receive £96 million for 2022, its final year.  Following this, a new £270 million scheme called the Green Heat Networks Scheme will be set up to enable new and existing heat networks to connect to waste heat that would otherwise be released into the atmosphere. 
  • There will be a consultation on introducing levy-funded biomethane production to increase the proportion of green gas in the grid. 


Electric Vehicles and reducing vehicle pollution 

The government has a target to increase the number of zero emission vehicles on the road and is currently consulting on bringing forward the phaseout date for the sale of new petrol and diesel cars and vans from 2040.  Related policy decisions announced in the budget include:  

  • An additional £403 million provided to fund an extension to the Plug-in Car Grant, a consumer incentive for low emission vehicles, extending it to 2022-23. 
  • Funding for investment in EV charging infrastructure with £500 million provided over the next five years to support the rollout of a fast-charging network for electric vehicles. 

If you would like to know further details, please contact us.


Contains public sector information licensed under the Open Government Licence v3.0.