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Reflection on the 2023 Budget Statement
Today the Chancellor, Jeremy Hunt presented his Spring Statement and set out the Government’s plans for tax and spending policy. Of the five key priorities set out by the Prime Minister in January, two of these – to halve inflation and grow the economy – impact Powerhouse Energy Group the most in its development of hydrogen generation from wastes.
There was a lot of information provided in the budget announcement, so it is difficult to say at time of writing exactly what the impacts will be. It is clear, however, that the Chancellor resisted the calls to abolish the rise in corporation tax but did provide new targeted tax incentives to encourage enterprise, employment and form the foundation for a growth strategy. Unfortunately, since Powerhouse does not yet generate profits, most of the new initiatives will not currently help us directly. If, however, they generate an atmosphere of positivity and raise the willingness to invest, this is to be welcomed and we look forward to a better business environment than the one we have experienced over the last year or two.
What is of great interest is the announcement of a new research and development scheme for small and medium sized enterprises, effective from April this year. It applies to R&D intensive SMEs that have a qualifying R&D expenditure of more than 40% of its total turnover. The rules have yet to be written, however, and the devil is always in the detail, so we will wait to see the consultation later in the summer. It is, nevertheless, very welcome.
Another item in the budget of interest to Powerhouse was the announcement of the establishment of 12 Investment Zones across the UK. The essence of Powerhouse Technology is that it is modest in size and can be built on a distributed basis in different places. Although the locations of the Investment Zones will be subject to Government approval and further secondary legislation, this development presents an interesting opportunity for the company to target the locations of its future facilities.
We welcome also the emphasis placed on green industries as a high growth sector within the economy, although we have been there before, and it remains to be seen quite how Government support will be forthcoming. Direct reference was made to carbon capture, usage and storage (CCUS) but no mention of support to bring about the hydrogen economy.
So, the budget is certainly a step in the right direction and presents some interesting opportunities for Powerhouse Energy Group. We welcome the culture of enterprise it seeks to develop but hope we will be excused for not celebrating just yet. With a plan that seems to have a three-year life and capital projects that take twice this time to bring to fruition, we do wonder how effective it will be. Also, with a general election that can be held no later than the 24th of January 2025, we cannot help but wonder whether Rishi, Jeremy and their teams will still be there to see it through.
Keith Riley
Acting Chief Executive Officer
Powerhouse Energy Group Plc