Manufacturers are calling on the Chancellor to announce a major reform of the UK’s uncompetitive business tax and regulatory environment in the forthcoming Autumn Statement to boost business investment planning.
In Manufacturing Growth: Building a Competitive Business Environment, Make UK and RSM outline the daunting challenge to reform the UK regime of taxation and regulation, with almost half (44%) of companies believing the current system is unfavourable and more than a quarter saying it is worse than China and other major competitors.
Both physical and digital infrastructure investment are crucial to meeting the manufacturing industry and its employee’s needs, with 36% of companies stating the business environment is central to a modern industrial strategy. However, the quality of road infrastructure was cited as bad or very bad by 44% of respondents, and nearly half (46%) said the same about rail infrastructure – which rises to 55% in the north despite investments in HS2.
Place-based economic incentives, such as special economic zones, freeports or investment zones vary in their benefits, however, most UK manufacturers (62%) are not based in any special economic zones, and 73% are not willing to relocate to these zones, and less than a third of industry believe they are an effective means of generating economic growth.
Furthermore, companies have stated that frequent changes to policies on investment and R&D incentives in recent years have hampered business investment plans – just 8% of companies say tax and regulation have no impact on investment decisions.
Reforms would look at measures, such as Business Rates, the research and development (R&D) tax credits, the Apprentice Levy and the Capital Allowances and Full Expensing system, and whether they are fit for an economy undergoing huge transformational change and in the need of long-term investment.
Crucially, the report provides further evidence that companies believe that an industrial strategy which encompasses reform of the current tax and regulation system would lead to greater investment in labour and skills, R&D and decarbonisation.
23 November | 11am-12pm
Building a competitive business environment for manufacturers RSM and Make UK manufacturing experts will discuss our new research on industrial strategy, the industry’s priorities for government and the outlook for the UK manufacturing industry.