What does the Summer Statement mean for UK innovation, research and development?


David Ward

David Ward

Tax Partner


Most people will understandably be more interested in the “eat out to help out” scheme, the temporary VAT cut for hospitality and leisure and the wide range of job support measures.

Behind those headline grabbers, I’ve looked through the Summer Statement documents for any announcements of further support for Research and Development (R&D) projects.

As expected, there are no changes to the existing and generous R&D tax incentive schemes, but there are some additional funding announcements. These all follow the “green recovery” theme, with targeted financial support for R&D projects to develop clean and green technologies. These include:

  • £100m of new R&D funding for Direct Air Capture technology. This is a new clean technology which pulls in atmospheric air, then through a series of chemical reactions, extracts the CO2 from it while returning the rest of the air to the environment. It is hoped that the technology can capture CO2 more quickly, and with a smaller land footprint, than would be the case through photosynthesis by plants and trees. 
  • £10m for innovative R&D projects to scale up manufacturing of the latest technology in batteries, motors, electronics and fuel cells. This is part of the Automotive Transformation Fund, announced last year, with up to £1bn of funding ultimately being available to drive the development of next generation automotive technologies.

The Government is also calling for proposals from industry for the UK’s first “Gigafactory” and supporting supply chains to mass manufacture cutting-edge batteries for the next generation of electric vehicles, as well as for other strategic electric vehicle technologies.

Whilst there are no major announcements, I am encouraged by the areas being targeted for immediate funding support. It would be great to see the UK pioneering the technology needed to drive the future of energy production, storage and use.