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Key manufacturing takeaways from the 2018 budget

Key manufacturing takeaways from the 2018 budget

29th October 2018

Chancellor Phillip Hammond delivered his budget in the style we have become accustomed to but with what felt like a distinct change in direction. We've gone through this year's budget and picked out some key points for UK manufacturing in R&D, Skills, Trade, Investment, Energy and Plastics.


  • £1.6bn earmarked for R&D funding to support Artificial Intelligence (AI), quantum computing, future manufacturing, and nuclear fusion 
  • £1.1bn to the Industrial Strategy Challenge Fund (ISCF) projects, including £121m specifically for Made Smarter projects
  • Investment of up to £25 million through Knowledge Transfer Partnerships (KTPs) to boost business productivity
  • £115m for the UK's Digital and Medicines Discovery Catapults.


  • £150m in funding for fellowships to foster the UK's burgeoning skills pool with both homegrown and international talent 
  • Reduction in the co-investment rate for non-Levy paying businesses from 10% to 5% and flexibilities for Levy payers.


  • UK Export Finance (UKEF) will see a one-off increase to its Direct Lending Facility of up to £2bn over 2020-21 and 2021-22.


  • Increased the Annual Investment Allowance (AIA) threshold from £200,000 to £1 million for the next two years.


  • A five-year £315 million Industrial Energy Transformation Fund to support businesses with high energy use to transition to a low carbon future.


  • A new tax on on the on the production and import of plastic packaging from April 2022 of plastic packaging which contains less than 30% recycled plastic*
  • Reform the Packaging Producer Responsibility System, which will aim to increase producerresponsibility for the costs of packaging waste, including plastic*. 

*Both of these measures are subject to consultation in the coming months.