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Autumn Statement: R&D investment to support innovation, self-driving cars and fibre network roll-out

The chancellor Philip Hammond has confirmed £2bn a year of additional investment into research and development by 2020/21.

Announced earlier this week by prime minister Theresa May, the investment will be funded through borrowing and is part of a new £23bn National Productivity Investment Fund that also includes money for housing and infrastructure.

As part of this, the government will establish a cross-disciplinary Industrial Strategy Challenge Fund to support collaborations between businesses and the UK’s science base, which will set identifiable challenges for UK researchers to tackle.

The fund will be managed by Innovate UK and research councils and is modelled on the US Defense Advanced Research Projects Agency.

Additional funding will be allocated to “increase research capacity and business innovation” – with soon-to-be established UK Research and Innovation to award funding on the basis of national excellence and a “substantial increase” in grant funding through Innovate UK.

“We do not invest enough in research, development and innovation,” Mr Hammond said.

“As the pace of technology advances and competition from the rest of the world increases, we must build on our strengths in science and tech innovation to ensure the next generation of discoveries is made, developed and produced in Britain.”

While the new R&D funding represents an increase of around 20 per cent on total government R&D spending, it will still leave the UK behind many other developed nations.

On construction R&D alone, the UK currently spends £43m per year, compared with £203m in France and £750m in Japan, for example.

The £23bn National Productivity Investment Fund also includes £390m to support ultra-low emission vehicles (ULEVs), renewable fuels, and connected and autonomous vehicles.

This includes £80m for ULEV charging infrastructure, £150m in support of low-emission buses and taxis, £20m for the development of alternative aviation and heavy goods vehicle fuels, and £100m for new UK connected and autonomous vehicle testing infrastructure.

The measures also include a 100 per cent first-year capital allowance for the installation of electric vehicle charging infrastructure, up to the end of March 2019.

Mr Hammond promised more than £1bn of investment in digital infrastructure, including £740m through the NPIF.

A £400m Digital Infrastructure Investment Fund will be established, which will be “at least matched by private finance” according to the Autumn Statement document and will invest in new fibre networks over the next four years.

From April, the government will introduce 100 per cent business rates relief for a five-year period on new fibre infrastructure.

The chancellor backed the National Infrastructure Commission’s interim recommendations on the Oxford-Cambridge growth corridor, calling for it to become a “transformational tech corridor, drawing on the world-class research strengths of our two best-known universities”.

And technology start-ups received a boost, with a £400m injection of venture capital funds through the British Business Bank, which Mr Hammond said will unlock “£1bn of new finance for growing firms”.

On sustainability, the Carbon Price Support will continue to be capped until 2020, uprating this with inflation in 2020/21. The policy has helped spur a shift in the UK’s energy mix away from coal to the less carbon-intensive gas.

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