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The future of the UK chemicals sector – and the role of Government

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1 The future of the UK chemicals sector – and the role of Government
Sravya Rao Chemicals Team BIS

2 The current investment climate
Why should Government support the chemicals sector? Chemicals is a strategically important sector for the UK The 2008 recession has made securing investment more challenging for chemicals companies in Europe However, companies are beginning to invest more as economic conditions improve – and this creates an opportunity for the UK… How does Government help the sector to secure greater investment and growth? Industrial Strategy Direct support

3 Industrial Strategy Key principles
Long-term; Government in partnership with business; and Whole-of-Government approach. For each of the 11 Industrial Strategy sectors: Setting up a sector council Industry and Government publishing a joint sector growth strategy Nuclear (March 2013) Oil and Gas (March 2013) Information Economy (June 2013) Aerospace (March 2013) Automotive (July 2013) Agri-tech (July 2013) Life Science Strategy (Dec 2011) and one year on update (Dec 2012) Professional Business Services (July 2013) Offshore wind (August 2013) Education (July 2013) Aim: Construction (July 21013)

4 Cross-Cutting Themes Supporting emerging technologies;
Working to improve access to finance for businesses; Working with business to help develop the skills that they need; Creating a simpler and more transparent public sector procurement system to foster innovation and help businesses plan and benefit from what government buy; A spectrum of support for all sectors.

5 Chemistry Growth Partnership (CGP)
Industry-led council for chemicals and chemicals-using sectors Co-chaired by Rt. Hon. Matthew Hancock, Minister of State for Business and Energy, and Neil Carson, former Chief Executive of Johnson Matthey Meets three times a year

6 CGP Growth Strategy “Chemistry at Work: Strategy for Delivering Chemistry-Fuelled Growth of the UK Economy” Published in October 2013 Ambition of 50 per cent growth in sector Gross Value Added by 2030 Source:

7 CGP Workstreams Securing competitive energy and feedstock supplies
Led by Tom Crotty, INEOS Re-building UK supply chains Led by Harry Swan, Thomas Swan & Co. Accelerating innovation Led by Ian Shott, Shott-Trinova Plus wider issues e.g. skills, exports, engagement with Local Enterprise Partnerships (LEPs)

8 “Small Business, GREAT Ambition”
Making it easier to… Published in December 2013

9 “Small Business, GREAT Ambition”
Making it easier to finance business growth Improve the lending appeals process Introduce tougher rules to govern banking Open up the banking sector to more DID YOU KNOW? 40% of declines lead to decisions being overturned in favour of the business working with the British Bankers’ Association to improve appeals [procedure]/ awareness/transparency at all levels

10 “Small Business, GREAT Ambition”
Making it easier to hire people Introduce an Employer Allowance, granting £2,000 relief on National Insurance bills Apprenticeship grant worth £1,500* and more influence over training and standards £2,000 relief on National Insurance bills through Employment Allowance Universal Jobmatch – a free online system matching candidates to job Bespoke help through the Small Business Recruitment Service helpline ( ) Introduce a fully online HMRC payroll system in 2014 Provide new support for small businesses trying to recruit from overseas^ *Available to each of the first ten of y/o ^ Applications are assessed much quicker, 97% are granted, improving application process for India and China with view to include more key emerging countries Some aspects to be discussed under skills

11 “Small Business, GREAT Ambition”
Making it easier to develop new ideas and products Provide generous tax relief on research and development costs Streamline Technology Strategy Board processes so that businesses can get access to support more quickly and easily* Connect businesses to funding and an expanded network of advisors to help small businesses get access to €70bn of EU funding for innovation *More detail to follow on TSB slide

12 “Small Business, GREAT Ambition”
Making it easier to break into new markets open up public sector procurement system prompts payment along whole of supply chain Solutions exchange allowing SMEs to pitch innovative ideas to Government problems Help more businesses trade online “Passport to Export” Simplify & expediate turnaround times for capital support (20 to 4 days) Improve awareness of UK Export Finance support Implement reforms to the competition system Invite businesses to tell Government what prevents them breaking into new industries Negotiate the best possible deal for SMEs through the EU-US Trade Agreement Passport to export: UKTI’s Passport to Export service is an export assessment and support programme for small and medium-sized enterprises (SME). It provides new or inexperienced exporters with training, planning and support to grow their business overseas.

13 “Small Business, GREAT Ambition”
Making it easier to get the right support at the right time In January 2014, launched a competition for the private sector to develop solutions which enable the establishment of a single ‘shop window’ for business support by the end of 2014 Conducting a review of Government business support services Rolling out Growth Hubs during 2014 and 2015, to provide a single place for businesses to go for local advice and support Working with Enterprise Nation to develop a new online marketplace for private and third sector support by January 2014 and use our £30m investment in Growth Vouchers to test what types of support work best Working with experts to continue to improve GOV.UK Online network 27k of mentors for SMEs (Mentorsme.co.uk) Enterprise Nation online market place for private and 3rd sector firms to market their services (which also has a rating service).

14 “Small Business, GREAT Ambition”
Making it easier to get on with doing business Continue to tackle domestic and EU red tape Reduce the burden on businesses by making it easier for regulators to share information Implement further improvements to the tax system in 2014 Put a new Growth Duty on all regulators from 2014 Consult early in the New Year on the introduction of a new independent Small Business Appeals Champion into each non-economic regulator Offer business representatives the opportunity to present their case – Business Focus Enforcements

15 Advisory Services Manufacturing Advice Service MAS Growth Accelerator

16 Manufacturing Advisory Service (MAS)
Advisory service for any manufacturing business based in England. Specialist sector advisors, including chemicals. SMEs are eligible for financial help with improvement projects. MAS targets firms with under 250 employees. Larger businesses can receive services at full market rate. Advice to help manufacturers streamline their processes, reduce waste, become more energy efficient, and grow their business. Connect businesses to LEPs and European Regional Development Funding and wider Government support e.g. UKTI.

17 How MAS works

18 Growth Accelerator Growth Accelerator is a unique service led by successful growth specialists for helping SMEs to find new connections, new routes to investment, and the new ideas and strategy to achieve their full potential. Growth Accelerator provides a framework to help SMEs: Build a successful growth strategy Discover new routes to funding and investment Unlock your capacity for innovation Harness the power of your people To be eligible for this support you must no more than 250 employees and a turnover of less than £40m

19 Regional Growth Fund (RGF)
Competitive Government grant fund operating in England. On 19 June, RGF Round 6 opened with c. £200m available to bidders. The deadline for applications is 30 September. Applications must meet the following criteria: The bid must be for at least £1 million RGF support. The project or programme must safeguard or create jobs. The project or programme must raise private investment, (e.g. own resources, investors or borrowing). The project must lever in at least £1 of private investment for every £1 of public support. Grants must be spent by March 2017. Some funding has gone to intermediaries running regional/national programmes to provide support to SMEs that wish to bid for grants of less than £1m. Winners will be announced in early 2015.

20 Advanced Manufacturing Supply Chain Initiative (AMSCI)
Consortium bids – minimum of two members including a manufacturer £100m open-ended rolling competition is open now, closing on 31st December or earlier if all funds allocated £1m entry level, no maximum – grants and loans Purpose can be: Research and development Purchase of capital equipment Training and skills development that supports the project Focus on job creation

21 Access to Finance Government providing finance for the Funding for Lending scheme to encourage banks to lend more £3bn Green Investment Bank provides loans and grants to enable provide private sector investment in “green” projects Seed Enterprise Investment Scheme provides tax reliefs to individual investors in early-stage SMEs to help companies raise equity finance Enterprise Investment Scheme and Venture Capital Trust Scheme to encourage investment in early-stage and high-risk companies £863m Business Finance Partnership (BFP) to diversify sources of SME finance by allocating funding to new lending channels £322m Start-Up Loans scheme provides mentoring and financial support to entrepreneurs

22 Business Bank Established to make finance markets work better for SMEs
Brings together the management of all the government lending and investment programmes into a single, commercially minded institution Aims to unlock up to £10bn of financing for SMEs over the next five years Provide funds and guarantees to private sector partners allowing them to finance more and different smaller businesses Currently operating in shadow form within BIS pending state aid approval (expected in the second half of 2014), which will allow the Bank to become fully operational Supported £791m of lending and investment to smaller businesses during the financial year 2013/14

23 Better Business Finance
Business Finance Support Finder

24

25 UK Trade & Investment (UKTI)
Companies who export or are seeking to export can: Sign up to a register of business opportunities Attend UKTI trade fairs, trade missions, events and webinars Receive advice from an International Trade Advisor or sector specialists Receive grants for trade missions (“Passport to Export”) Receive advice and finance support to research new markets (“Export Market Research Scheme”) Receive support to develop an international communications strategy (“Export Communications Review”) Receive advise and support from UKTI staff based in target export countries (“Overseas Market Introduction Service”) Package of support for medium-sized businesses to assess their export capability or develop their existing export operations further Support for experience exporters (“Gateway to Global Growth”)

26 UKTI Encouraging Foreign Direct Investment “GREAT” campaign
Relationship management with foreign companies Providing guidance and support to companies expanding to the UK Making it easier for companies to bring foreign expertise Access to lists of professional service organisations Practical help e.g. visits to locations, accessing financial incentives Assistance in finding new partners and expanding business “GREAT” campaign Promoting the UK brand in key overseas markets

27 Tax & Allowances Cut the main rate of corporation tax to 21% and to 20% in April 2015 Patent Box from April 2013 provides reduced corporation tax rate of 10% for companies on profits derived from products patented in the UK R&D relief on corporation tax bill SMEs: tax relief on allowable R&D costs is 225% Large companies: tax relief on allowable R&D costs is 130% Budget 2014 announced 100% first year capital allowances in enterprise zones will be extended for three years to 31 March 2020 Legislated to extend the capital allowances short life asset regime for plant and machinery from four years to eight years from April 2011 Doubled the Annual Investment Allowance to £500,000 until 2016 to support business investment Autumn Statement 2013 announced a £1.2bn business rates package, including capping business rates increases at 2% and extending the Small Business Rate Relief for 12 months from April 2014

28 Innovation Technology Strategy Board (TSB) incentivises business-led technology innovation through programmes including:

29 Innovation & InnovateUK (formerly TSB)
Innovation Vouchers of up to £5,000 to work with experts that can help develop your ideas Smart grant to support R&D projects i.e. Proof of market (£25k max) Proof of concept (£100k max) Development of prototype (£250k) Range of support to facilitate greater collaboration, access to network of experts and bring high potential ideas closer to production via Catapult Centre Catapult Centres to access specialist equipment and emerging technologies, plus academic and big business expertise: High Value Manufacturing Catapult is a network of 7 centres e.g. Centre for Process Innovation (CPI) in Teesside, Warwick Manufacturing Group in Coventry

30 Other support available

31 Skills 50 University Technical Colleges (UTCs) Companies can:
Shape courses to develop job-relevant skills Mentor students Provide access to their facilities Apprenticeship Trailblazer projects led by employers and professional bodies, will develop the new Apprenticeship standards for a number of occupations. Our first Trailblazers sectors include Life Sciences and Industrial Sciences. STEM Ambassadors programme to get children interested in STEM careers. Budget 2014 set out: Another £85 million to extend the Apprenticeship Grants for Employers scheme to fund more than 100,000 additional incentive payments for employers. £20 million for apprenticeships up to postgraduate level, delivering the technical skills that some businesses need, and steps to identify and remove the barriers to accessing postgraduate education. *Employers influence the teaching and learning that students receive, provide leadership in the structure of the curriculum and endorse the qualifications offered at a UTC. They also: work with teachers to create employer projects that focus on real-life challenges and are relevant to industry give students high-quality and relevant work experience support and mentor students, guiding them on career routes and options nominate governors to direct the leadership of the UTC provide access to their facilities to inspire and inform students ensure that the curriculum gives students the hard and soft skills they need in the workplace.

32 Science Industry Partnership (SIP)
Round 2 of the Employer Ownership Fund to create employer-led skills programmes £51m of Government and industry funding for: Life Sciences Chemicals Administrated by COGENT Activities include: Workforce Development Traineeships Gold Standard Technicians SMART Apprenticeships Skills for Growth Industry Degree Scheme STEM Careers Modular Masters *Over 100 science employers have bid into the EOP. This bid was submitted on behalf of the sector by GSK ^The SIP secured £32.6 m grant for a two year programme of activity with an employer cash match of £20.3 m in cash investment and £31.4m in kind from time engaged. Employer investment totals £51.7, combined with grant = £84.3m GlaxoSmithKline 3M UK Plc Amgen Limited Becton Dickinson UK Ltd Eisai Europe Limited Fujifilm Diosynth Biotechnologies UK Ltd Green Biologics Ltd Johnson & Johnson Ltd Lotte Chemical UK Ltd Medimmune NHS England Novartis Pfizer UK PolyTherics Ltd Sera Laboratories International Ltd (SLI Ltd) Steel Bars Ltd Synergy Health UK & Ireland Takeda Cambridge Ltd UCB Celltech Vectura Limited Victrex Plc

33 Who else should I be talking to?
Local Enterprise Partnerships (LEPs) COGENT Institute of Chemical Engineers (iChemE) Royal Society of Chemistry (RSC) Cluster organisations e.g. North East Processing Industries Cluster (NEPIC) Growth Accelerator – Access to Finance, Business Development, Growth through Innovation, Leadership and Management, Growth Community

34 Any questions? For further information, please contact: Sravya Rao


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