27/10/2021
Commenting on the statement by the Chancellor of the Exchequer today, Stephen Phipson, Chief Executive of Make UK, said:
“Make UK welcomes the direction set out by the Chancellor today but hopes to see more focus on manufacturing as the plans unfold. At a time of such hardship for so many people the Chancellor was right to prioritise help for the most vulnerable and those on low incomes. Manufacturers agree this has to be a priority for spending in the short term and will support his aim.
“Overall, however, as far as manufacturers are concerned the rest of the statement generated a mixed response. While there were some welcome announcements on business rates and the extension of the annual investment allowance, the announcements on skills amounted to little, if any, new money while the delay in the R&D spending target goes against the aim of making the UK a science superpower. In addition, we had hoped to hear more about driving digitalisation and Net Zero Transition, issues at the forefront of the next industrial revolution. Furthermore, while growth is returning, future prospects look anaemic and will not be helped by the substantial tax rises companies are facing.
“The current approach would benefit from a long-term economic plan. We face huge technological and societal challenges. Manufacturers are ready to seize the opportunities these challenges will provide and, in many cases, are already providing many of the solutions.
“But they can only do so if Government is willing to work with the grain of business and industry. This requires a partnership to develop the vision for our economy in the medium to long term and the development of policies which will support it.”
On reforms to business rates, Verity Davidge, Director of Policy, said:
“Manufacturers will be pleased to hear today of the Chancellor’s offering of both a 12-month relief on businesses rate hikes arising from premises investment, and the cancellation of the planned increase to the business rates multiplier. The threat of increased rates has always had a suppressing effect on manufacturers likelihood to invest in their plant, so this relief, albeit short-term, is a step in the right direction in giving the manufacturing sector the reliefs and support it needs to deliver Britain’s recovery.
“However, for many businesses, just a period of twelve months won't be relief enough for those businesses who already struggle with their rates payments. Further work needs to be undertaken as part of the much-awaited Business Rates review, particularly where productivity-enhancing plant & machinery improvements can raise business rates.”
On the R&D target, Verity Davidge, Director of Policy, said:
The Government’s decision push back on its target R&D expenditure is a disappointing response to the Government’s ambition to be a science superpower. With two thirds of all R&D expenditure coming from the UK manufacturing, this move undermines future business confidence to invest in new technologies and innovations.
“Another missed opportunity was a true expansion of the R&D tax relief scheme, the most commonly used form of innovation support among manufacturers. While the Chancellor dipped his toe in the water with the inclusion of data and cloud costs, manufacturers would have wanted to see employers to claim for capital expenditure needed for R&D, as well as allowing deductions for the opportunity cost of plant being used for R&D as opposed to commercial production.”
On extension to the annual investment allowance, James Brougham, Senior Economist, said:
“Industry will welcome the extra certainty the extension of the uplift to the Annual Investment Allowance will afford it. This maintained uplift gives manufacturers the capacity to commit to larger-scale investments in a period where businesses have been more bearish with their cash than usual.
“However, to best serve the industry, Government should maintain this higher level of investment allowance, and give the economy a significantly longer five to ten year time horizon to make use of the scheme, as opposed to snap single year extensions which limit use of the scheme to only those most reactive businesses.”
On investment in skills, Bhavina Bharkhada, Head of Policy & Campaigns, said:
“While on the surface, the Chancellor looked to take steps towards tackling training our current and future workforces, what was announced will make just a small dent in what is an increasing skills gap.
“As stubborn labour market shortages continue to hold back manufacturers, stifling growth and recovery across our regions, manufacturers will welcome shorter, sharper training courses such as skills bootcamps, but these should not replace much needed and radical reform to existing skills and training pathways like apprenticeships.
“For high-wage, high-skill industries like manufacturing, this was a missed opportunity to go further in creating an ambitious, modern skills system to match the ambition of manufacturers in the next decade. Government needs to rapidly gear up our skills system for the digital and green future manufacturers are creating, putting in place measures and incentives not just in for short term but for the long term.”
On £7bn investment for levelling up, Verity Davidge, Director of Policy, said:
“Today’s announcement of £1.5bn new money will fall short of the required investment needed in wider infrastructure such as local transport and digital connectivity to unlock productivity and growth for our sector. With almost half of manufacturers dissatisfied with the Government’s progress on levelling up to date, levelling up needs to go further than piecemeal support in selected areas, it needs to be strategic and long-term.
“Manufacturers were hoping to see the beginnings of long-term strategy with clear measures to drive up business confidence, spark greater investment across the country, and crucially build national resilience.”
On the increase to National Living Wage, Bhavina Bharkhada, Head of Policy & Campaigns, said:
“Overall, today’s announcement to increase the National Living Wage will be seen as just about bearable in terms of uplifting those on or around this rate. The nervousness among employers however will be the knock-on impacts of maintaining pay differentials as well as factoring in the impending NI increases meaning the overall cost of recruitment is rising at some pace.
“To counter these new costs to business, Government should take steps to incentivise recruitment, including extending Kickstart, overhauling the apprenticeship funding system and ensuring that initiatives such as the Lifetime Skills Guarantee are accessible to as many existing and potential employees as possible.”
On the establishment of a Modern Methods of Construction Taskforce, Steve Cole, Head of Policy at Make UK Modular, said:
“The establishment of a Modern Methods of Construction Task Force is a welcome step given the UK housing market is at a tipping point where it could transform into the most advanced housing manufacturing market in the world.
“By shifting housing to a manufacturing-based approach and using and developing advanced technologies can deliver, in under a decade, in excess of 75,000 new green homes and 50,000 new skilled jobs via factory built modular housing. Modular construction can also use the nation’s buoyant housing markets to drive employment in other parts of the country supporting the levelling up agenda.”