Make UK calls for government-backed scrappage scheme for old IT, plant and machinery equipment to boost manufacturing

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​To help manufacturing recover from Covid-19, the government should implement a new scrappage scheme for old IT, plant and machinery equipment, so as to incentivise cash-strapped firms to invest in automation and digitisation to boost output and exports, says manufacturers’ organisation Make UK.

The scheme should run hand-in-hand with a programme to encourage UK consumers to buy new, more environmentally friendly cars through a government-funded scrappage scheme, delivering a much needed boost to the country’s automotive industry.

A voucher-style system, where government gave a contribution of around £5,000 for each new car, would deliver a healthy incentive for households to upgrade, with industry contributing the trade-in value of the old model.

This double cash injection would give businesses the head start they desperately need as they struggle to replenish their decimated order books and get production up and running again.

Up-front labour and raw material costs are proving a block to many factories that have been forced to close or run on lower capacity over the past few months since the pandemic outbreak. Others that shifted to making much needed medicines, sanitisers and vital medical equipment to support the NHS and combat the spread of the disease also face considerable costs as they revert their factories to normal production.

Says Stephen Phipson, CEO of Make UK: “The challenge faced by manufacturers as they start to rebuild their businesses and bring staff slowly back into the workplace is vast. Supply chains have been decimated and order books are in the worst state in decades. To survive, businesses will need to take every advantage they can of the latest technologies and equipment to boost productivity to get back on track in the coming months.

“Industry is grateful for the help government gave them during the crisis, but now as we come out the other side, we need to look to them for innovative schemes that can help businesses recover quickly, and building their technological armoury is an important weapon in this battle. These initiatives will not only help businesses get back on their fee but would, at the same time, tackle important environmental issues that are important to government as we work together to build a greener Britain fit for the future.

“The UK’s manufacturing sector has always been agile and has shown in the last few months just how quickly it can adapt but as a growth providing sector we must emerge stronger and better equipped to compete in the global trade environment to be able to do our bit effectively in the country’s economic recovery.”