The UK should “level up” its investment in green technologies to match the US and the EU, according to the chief executive of the FTSE 100 packaging company DS Smith.
Speaking days before the chancellor Jeremy Hunt’s spring budget, Miles Roberts said the UK government needed to give a clear signal of its long-term plans, particularly for low-carbon power generation.
The US is spending $369bn (£310bn) on subsidies for green technologies under the Inflation Reduction Act, while the EU has been scrambling to come up with a response after some companies warned that they were considering prioritising America for investment.
“We need to make sure that the UK levels up to the US and Europe,” Roberts said. “That is a formidable package of support. We’re saying to the UK government: ‘How do we make sure that we don’t fall behind?’”
Uncertainty over the Conservatives’ plans for green power generation was making it more difficult for DS Smith to invest in new facilities in the UK, Roberts said. Packaging companies are recognised by the government as energy-intensive industries because they require large amounts of heat to reform recycled cardboard into new boxes. Demand for packaging has risen inexorably in recent years thanks in part to the boom in online deliveries.
“Going forward, we have to decarbonise, but what are your plans? Where are they?” he said of the government’s energy policy. “We come to the UK and say: ‘Can we just understand what is your policy?’”
Roberts also said the government should extend the “super deduction”, which is scheduled to end in April. The two-year tax break has allowed companies to offset 130% of investment spending on plant and machinery against profits.
“What can we do in two years?” Roberts said. “If they said: ‘We’re going to do this over a 10-year period,’ and actually stick to their word, then these things would help.”
The Labour party, which has a large lead over the Conservatives in the polls, has said it will consider similar long-term tax breaks. Roberts said Labour should offer detailed guidance on its policy plans to industry.
Bloomberg reported on Saturday night that Hunt would announce a temporary “full-expensing” regime for corporation tax, to replace the super deduction. Full-expensing will let companies deduct the full cost of certain investments from their taxable profits in the year it was incurred, rather than spread over several years. The Treasury has estimated that it could cost £11bn a year.
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Rishi Sunak’s government has not so far signalled any intention to subsidise Britain’s green industry on a similar scale to the US or EU, although it is thought to be considering some large investments in decarbonisation, such as a request for £500m to support a battery “gigafactory”, and £300m apiece to upgrade the UK’s two steelworks with blast furnaces.
However, the government on Thursday delayed one major infrastructure project, the HS2 rail line, because it wanted to spread the cost over a longer time period.
