Chancellor Jeremy Hunt ‘wary’ of new subsidies as companies look to US for government support
One of Britain’s only battery producers is considering shifting manufacturing from the UK to the US to benefit from American subsidies, Sky News can reveal.
AMTE Power, a Thurso-based firm with a history going back to the very earliest days of lithium ion batteries, told Sky News it is now very difficult to justify keeping production in the UK given the incentives being offered to companies to make green technology in the US.
It comes after America introduced an unprecedented set of subsidies for green companies as part of its multibillion dollar Inflation Reduction Act (IRA).
AMTE made some of the first lithium ion batteries for military customers in the 1990s
However, the Chancellor Jeremy Hunt told Sky News that Britain should be wary of any new subsidies, warning that they could undermine the economy and might even trigger a protectionist trade war.
AMTE, whose history includes having made some of the world’s very first lithium ion batteries for military customers in the 1990s, has plans for three new special types of cells: one for high-performance vehicles, one for energy storage and one very long-lasting battery.
The business is already making batches of the cells in its Thurso base but has plans to build a bigger plant – a gigafactory, as large battery plants are sometimes called – in Dundee. But the IRA has completely changed the calculus, according to chief executive Alan Hollis.
“In the Inflation Reduction Act, the typical support for the running costs of a gigafactory would be between 30 and 50% of the operating costs,” he said. “The answer is perfectly clear [about] where the most economic place for the gigafactory will be.
“We don’t have a competitive environment in the UK at this moment in time.”
Several large and small companies, including car giant Volkswagen, have announced plans to open new battery production in the US. And since the IRA covers all green technologies there are fears that other UK businesses, focused on hydrogen, carbon capture and wind power among others, might relocate.
AMTE’s warning is of particular symbolism, however, since some of the world’s very first lithium ion batteries were made at its Thurso plant.
AMTE Power’s Alan Hollis says the UK does not have a ‘competitive environment’
Mr Hollis said AMTE was now actively considering shifting its production overseas.
“We are a home-grown UK business,” he said. “We see ourselves as a UK company. We’ve developed the technology here. We want to commercialise the technology here and we want to manufacture the product here.
“But we have to ask the question if the subsidies are available overseas.”
The warning follows the implosion of the great hope for the UK battery sector, BritishVolt, which faced administration and whose plans for a gigafactory in Blythe remain in doubt.
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How lithium batteries are made
Mr Hollis said: “Unless we make the UK a competitive place for battery manufacturer, we probably won’t end up with a battery manufacturing industry in the UK. And the consequences of that are clear for the automotive industry and for the energy storage sector as well.”
However, the chancellor, who discussed the Inflation Reduction Act with his international counterparts in Washington over the past week, signalled that he had no plans for fresh subsidies.
“If you depend entirely on subsidies, there’s a risk,” he told Sky News. “First of all it’s wasteful to spend money subsidising factories that would have been built anyway. Secondly, when you take subsidies away, you can end up with a business that’s not viable.”
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Mr Hunt says the UK should be wary of any new subsidies
“So our model in the UK is a combination of some support to get businesses off the ground and then some market regulatory changes that mean those businesses have a long-term future and investment incentives through the tax system.”
Asked whether he feared the IRA would lead to more protectionism around the world, Mr Hunt said: “We can be sensible and pragmatic and develop supply chain sources through our friends – sometimes through ourselves – and continue to benefit from sharing and benefiting mutually from technology.
“If we were to turn our backs on free trade that will be a disaster for the world economy. We will enter into a dark ages period.”
Sky News’ economics editor Ed Conway and Chancellor Jeremy Hunt
The chancellor intends to reveal more details of his response to the US Inflation Reduction Act at the Autumn Statement later on this year. However, many businesses are already starting to make plans to shift production.
“The time to be thinking about making investments is now; it’s not in six months’ time. It’s now. Our competitors are getting significant advantage from their governments… We’re struggling to raise the funding and to get the government support.
“And so that ideally, what we need is a joined-up end-to-end industrial strategy from the government that enables the creation of a competitive environment for the UK battery industry here in the UK. That then enables us to become competitive and create jobs, drive the investment and achieve our green goals.”
Business
Concessions to welfare reforms to be revealed after Labour backbench rebellion forces government retreat
Changes to welfare reforms, forced on the government by rebel Labour MPs, are being revealed today ahead of a crucial vote.
The original bill restricted eligibility for the personal independence payment (PIP) and cut the health-related element of universal credit (UC).
The government, which insisted welfare costs were becoming unsustainable, was forced into a U-turn after 126 Labour backbenchers signed an amendment that would have halted the bill at its first Commons hurdle.
Explainer: What are the welfare concessions?
While the amendment is expected to be withdrawn, after changes that appeased some Labour MPs, others are still unhappy and considering backing a similar amendment to be tabled today.
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Starmer defends welfare U-turn
Here are the main changes to the UC and PIP bill:
• current PIP claimants will keep their benefits; stricter eligibility requirements will only apply to new claims from November 2026
• a review of the PIP assessment, which will have input from disabled people
• existing recipients of the health-related element of UC will have their incomes protected in real terms
Work and Pensions Secretary Liz Kendall said in a statement that the legislation now aims to deliver a “fairer, more compassionate system” ahead of the second reading and vote on Tuesday.
“We must build a welfare system that provides security for those who cannot work and the right support for those who can. Too often, disabled people feel trapped, worried that if they try to work, they could lose the support they depend on.
“That is why we are taking action to remove those barriers, support disabled people to live with dignity and independence, and open routes into employment for those who want to pursue it.
“This is about delivering a fairer, more compassionate system as part of our Plan for Change which supports people to thrive, whatever their circumstances.”
Work and Pensions Secretary Liz Kendall insists welfare reforms will create ‘a fairer, more compassionate system’. Pic: PA
On Saturday, Sir Keir Starmer said fixing the UK’s welfare system was a “moral imperative”. The government claimed cuts to sickness and disability benefits would shave £5bn off the welfare bill and get more people into work.
The Resolution Foundation believes the concessions could cost as much as £3bn, while the Institute for Fiscal Studies warned that the changes make tax rises more likely.
Read more:
Starmer’s most damaging U-turn yet
Liz Kendall defends welfare retreat
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Health Secretary Wes Streeting told Sky News that welfare bill changes have put Labour in a much better position ahead of tomorrow’s vote.
On Sunday Morning with Trevor Phillips, Mr Streeting said: “There were things that we didn’t get right, we’ve put right, and there’ll be a debate about future amendments and things, I’m sure, as it goes through in the usual way.”
Talking to Sky News about the welfare reforms, Health Secretary Wes Streeting said there were things Labour ‘didn’t get right’
On the same programme, shadow work and pensions secretary Helen Whately repeatedly refused to say whether the Conservatives would back the bill, but would review the proposals after the minister’s statement later.
“We have said that if there are more savings that actually bring the welfare bill down, if they’ll get more people into work, and if they commit to using the savings to avoid tax cuts in the autumn, which looks highly unlikely at the moment, then they have our support.”
The Liberal Democrats plan to vote against the bill and have called for the government to speed up access-to-work decisions to help people enter the workforce.
Donald Trump has said the US government has found a buyer for TikTok that he will reveal “in about two weeks”.
The president told Fox News “it’s a group of very wealthy people”, adding: “I think I’ll probably need China approval, I think President Xi will probably do it.”
TikTok was ordered last year to find a new owner for its US operation – or face a ban – after politicians said they feared sensitive data about Americans could be passed to the Chinese government.
The video app’s owner, Bytedance, has repeatedly denied such claims.
It originally had a deadline of 19 January to find a buyer – and many users were shocked when it “went dark” for a number of hours when that date came round, before later being restored.
However, President Trump has now extended the deadline several times.
The last extension was on 19 June, when he signed an executive order pushing it back to 17 September.
Mr Trump’s latest comments suggest multiple people coming together to take control of the app in the US.
Among those rumoured to be potential buyers include YouTube superstar Mr Beast, US search engine startup Perplexity AI, and Kevin O’Leary – an investor from Shark Tank (the US version of Dragons’ Den).
Bytedance said in April that it was still talking to the US government, but there were “differences on many key issues”.
It’s believed the Chinese government will have to approve any agreement.
The president said the identity of the buyer would be disclosed in about two weeks. Pic: Fox News
President Trump’s interview with Fox News also touched on the upcoming end of the pause in US tariffs on imported goods.
On April 9, he granted a 90-day reprieve for countries threatened with a tariff of more than 10% to give them time to negotiate.
Deals have already been struck with some countries, including the UK.
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The president said he didn’t think he would need to push back the 9 July deadline and that letters would be sent out imminently stating what tariff each country would face.
“We’ll look at the deficit we have – or whatever it is with the country; we’ll look at how the country treats us – are they good, are they not so good. Some countries, we don’t care – we’ll just send a high number out,” he said.
“But we’re going to be sending letters out starting pretty soon. We don’t have to meet, we have all the numbers.”
The president announced the tariffs in April, arguing they were correcting an unfair trade relationship and would return lost prosperity to US industries such as car-making.
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