The government urged to work with businesses and end the blame game
Britain’s manufacturers are urging the Chancellor to use his forthcoming Spending Review and Budget to set out the Government’s long-term vision for the economy to help boost recovery and business confidence.
The call was made by Make UK in publishing its own immediate and medium-term priorities to boost investment. In its submission, Make UK sets out its own views on how the UK can successfully transition to a digital and green future, as well as a vision for Global Britain and what that means for UK manufacturers. The submission is also backed by nineteen manufacturing trade bodies (1).
Make UK added that given the abandoning of an industrial strategy, in order to encourage boardrooms to make the crucial decision to invest in the UK, and not overseas, a long-term vision for the economy and industry is vital for investors to retain confidence in the UK.
Make UK also urged the Government to itself move on from Brexit, and end the blame game with business over the current significant challenges. Instead, Make UK is calling on Government to step up working in partnership with business and industry, as it is doing in some areas, to address these challenges in the short, medium, and long term.
Furthermore, Make UK emphasised that far from relying on cheap labour, manufacturing is a high skill sector that invests in its workforce and already pays above the national average. Even during the worst period of the pandemic 57% of companies planned to take on an Apprentice while 47% intended to this year.
Commenting, Stephen Phipson, Make UK Chief Executive, said:
“Industry is vital to the future of any new economy. It will also be the solution to not just the major societal and environmental challenges we face in the future but, the need to boost living standards in a practical way across the whole of the UK.
“To encourage the investment in technology and skills we need to help make this realistically happen, Government must set out a long term vision for the economy that works with the grain of business to promote growth and wealth creation, not against it.
“Currently there is a feeling within industry that the Government is still fighting the last war and sees business as the enemy within. Business has moved on and, Government must do too, working in a spirit of partnership with industry to develop a longer term economic plan which has enterprise and wealth creation as the fundamental principle. Growth is the right solution to making the most of the opportunities ahead of us and getting the job done.”
According to Make UK, while the manufacturing sector is set to grow strongly this year by 7.1% and 4.2% in 2022, the decision by Government to increase the tax burden for manufacturers means that the sector will not simply bounce back to where it was before the pandemic. Furthermore, history suggests that job cuts are most likely when the economy starts to open again after a downturn because firms need the capital to reset.
According to Make UK, It is therefore essential that Government recognises the significant challenges that the industry faces, and works with the sector to put in place the necessary immediate, six-month, and twelve month measures to ensure the sector can recover, invest, and grow in the next decade.
This includes focusing on creating a conducive business environment that unlocks further investment and generates revenue from growth rather than increasing the tax burden on business. In its submission, Make UK has set out the following recommendations to promote investment and job creation, especially among young people:
• Extend the 130% superdeduction investment incentive beyond March 2023
• Extend the Kickstart scheme for at least 12 months, not just to March
• Modify the job support scheme to support manufacturers
• Extend the Help to Grow schemes, creating a Help to Grow Green programme
• Roll out the Made Smarter initiative to help SME digital adoption across the UK
Within the next six months:
• Fix the business rates system by simplifying the process, removing plant and machinery from calculations and removing green investments from the rateable value
• Enable employers to use up 20% of apprentice levy funds to be allowed to support wage costs for apprentices and double the incentive payment for employers
• Develop an online, digital skills account for employees
• Offer support, such as VAT relief to help kick start the smaller players in the intensive or high energy raw material supply chains
• Outline how to take forward feedback from R&D tax credit relief consultation
• Develop further on-the-ground support with in-market contacts, agents, and other advisors with the local knowledge to help companies succeed in new markets
• Bring forward a package of grants and practical support to assist exporters to attend trade shows and similar events
Within the next twelve months:
• Allow employers to spend up to 20% of their apprentice levy funds on capital expenditure and provide additional funding for providers for capital equipment
• Explore the introduction of an Export Tax Credit to support successful exports
• Establish a cross-industry and government resilience taskforce. This taskforce would assess the supply chain disruptions throughout the crisis and establish an action plan for future lockdowns or pandemics