The country eagerly awaited today’s Autumn Statement with the Chancellor setting out the government’s spending and taxation plans for the next year. There had been various briefings in the media about possible announcements that may affect the sector, with speculation on full expensing, skills and broader investment for the sector.
Today’s Autumn Statement was a success for UK manufacturers, with a massive policy win on full expensing with further details of the package enabling another of our victories - the full roll-out of the Made Smarter scheme. There were also announcements on: tax cuts (National Insurance and R&D reliefs for SMEs); apprenticeships; investment zones; planning red tape; and national grid connectivity.
He also wasted no time in highlighting the OBR’s announcement that the Autumn Statement measures will make inflation lower than it otherwise would have been - with CPI set to fall to 2.8% by the end of 2024 before reaching the Bank of England’s 2% target in 2025. Core inflation is also now lower than half of the economies in the EU.
The headline piece was our biggest policy win of the day - full expensing being made permanent. The chancellor’s announcement, with a shoutout for Make UK, follows a joint letter from Make UK and CBI sent into the Chancellor last Friday, with 200+ signatories from the sector, which called for the measure to be made permanent. It means that businesses can claim 100 percent of capital allowances on qualifying plan and machinery investments, and for every £1 that a business invests in IT, machinery and equipment, they can claim back 25p in corporation tax.
Made Smarter scheme
As part of a £4.5bn package of investment for key growth sectors over five years, the Made Smarter scheme is being expanded to all of England in 2025, before working with the devolved nations to explore making it UK-wide from 2026/7. It also includes digital apprenticeships which is a great addition given the need to secure more digital skills in manufacturing. £2bn is also earmarked for green investment in the automobile industry and £975m in aerospace.
R&D tax relief
The government also plans to introduce a simplified R&D tax relief combining the existing R&D expenditure credit and SME scheme. The rate at which loss-making companies are taxed will be reduced from 25% to 19%, while the threshold for additional support for R&D intensive loss-making SMEs will fall from 40% to 30%.
Apprenticeships & skills
Hunt announced £50m over the next two years to increase the availability of apprentices in engineering and other key growth sectors. It will provide the right support for the many manufacturers who have long called for better support from the Government to invest in training. We look forward to working with the Government on how this pilot can work in practice and we can increase the number of apprenticeship starts in our sector.
The Chancellor’s speech touched on the confirmation of the next set of investment zones in Greater Manchester, the West Midlands, and the East Midlands; and a doubling of the flexible funding envelope for each investment zone from £80 million to £160 million by extending the programme and associated tax reliefs from five to ten years. There is also an additional zone planned in Wales for the Wrexham and Flintshire region. Importantly, there was an extension for the incentives, which Make UK called for and will go some way to ensuring that place-based incentives work.
Plus FDI, NLW and more
There was also the publication of the Harrington Review on Foreign Direct Investment (FDI) that Make UK fed into. We will be looking closely at these recommendations and how we can ensure that the UK is attractive place to do business.
We also saw the Chancellor formally accept the Low Pay Commission’s recommendations to increase the National Living Wage and National Minimum Wage increases. We will be going through the detail of this on our webinar this Friday (see details below).
Commenting on the Autumn Statement, Stephen Phipson, Chief Executive of Make UK, said:
“This was a bold statement by the Chancellor who has worked hard to understand industry’s needs and deliver a transformational strategy designed to turbo charge investment.
“Manufacturers will applaud this focus on addressing the painful achilles heel that has troubled the economy for decades. The biggest factor that companies want when planning investment decisions is certainty in policy and this has now been provided by making full expensing permanent.
“Industry will also welcome measures to boost engineering apprenticeships and stimulate advanced manufacturing, which will be vital in boosting high value growth and high skill employment in the economy of the future.
“The Chancellor has worked closely with Make UK and promised an autumn statement with manufacturing at its heart. He has delivered on that commitment and it is now down to industry to pick up the gauntlet.”
If you’d like to hear more about the other measures announced today then sign up for our FREE webinar:
- ‘What the Autumn Statement means for manufacturers’ takes place this Friday (24th November) 11am-12pm, and will see the Make UK policy team make sense of the Chancellor’s announcements for our valued members and the industry at large. Sign up here.