Stephen Phipson, chief executive of Make UK, the manufacturers' organization, 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.”
Business rates
On reforms to business rates, Verity Davidge, Make UK 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.”
R&D
On the R&D target, she 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.”
Budget is "business friendly"
Tony Danker, CBI director general, said: “Today, the Chancellor has shown a genuine willingness to listen to business with measures that will get firms innovating and help the economy to grow. It takes several positive steps forward, but isn’t bold enough to deliver the high investment, high productivity economy the Government seeks.
“On Business Rates, the Chancellor made real strides in making the system more palatable for businesses in the shorter term. More frequent valuations, wider reliefs and improving the incentives for firms to decarbonise their premises is what firms have been calling for. But the hard truth is that wholesale reform to unlock investment was rejected today. The Government missed the opportunity to truly reform a business rates system that diminishes Britain’s high streets and factories.
“The Government’s commitment to innovation will be a central cog to the UK’s prospects to leading in the industries of the future. This will be essential to be globally competitive so the Government must stick to these targets in the coming years.
“Meanwhile, businesses will welcome the new skills bootcamps. This agile approach must now be the watchword when it comes to revolutionising the skills landscape, including for apprenticeships.
“This Budget alone won’t seize the moment and transform the UK economy for a post-Brexit post-Covid world. Businesses remain in a high tax, low productivity economy with concerns about inflation. But the Budget will have a positive impact across the economy and makes several changes that will be welcomed by UK businesses.”
Investment in skills
On investment in skills, Make UK head of policy and campaigns Bhavina Bharkhada, said although there were steps towards tackling current and future workforces, what was announced will make only a small dent in what is an “increasing skills gap”.
She added: “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.”
The Chancellor also announced the National Living Wage would rise from £8.91 to £9.50 in April next year that she said will be seen as “just about bearable in terms of uplifting those on or around this rate” and “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.
Automotive
As for the automotive sector, SMMT chief executive Mike Hawes said: “The effects of the pandemic continue to hurt businesses across the sector – supply chain disruption, skills shortages and punitive energy costs. The Budget included some significant steps, most notably in adjusting business rates to allow relief on renewable energy and the extension of the super-deduction.
"Together with the Global Britain Investment Fund which provides £817m to support the transition of automotive manufacturing and the £620m announced last week for incentives, as well as investment in charging infrastructure, these are a recognition of the importance of the automotive sector and its ability to drive innovation and exports, and to create well-paid, highly skilled, green jobs across the country.
"However, if we are to attract the investment in plant and machinery that a modern, competitive and decarbonised industry needs, a more fundamental change in business rates is still necessary - one that actually incentivises the continued investment that factories need to be at the cutting edge of operational efficiency.
"The Budget was also a missed opportunity to support the many supply chain businesses which are suffering cash flow shortages due to stoppages arising from the semiconductor shortages.”
Aerospace
ADS chief executive Kevin Craven, said: "Today’s welcome commitment to extend Aerospace Technology Institute funding to 2031 recognises the need for long-term partnership to achieve our net zero goals and make the UK a global leader in green aerospace technology.
“Support for cutting edge aerospace innovation will sustain jobs, level up opportunities in every part of the country, and help to secure billions of pounds in industry investment.
“Our members will be looking for early clarity on an ATI funding level that matches industry ambitions here in the UK to deliver net zero aviation.”
EngineeringUK
In a statement, EngineeringUK said that it was disappointed that the Government had decided not to take forward its call for £40m additional funding for careers provision. "The government has big ambitions to make the UK a green science superpower and achieve net zero by 2050. To make this a reality, the UK needs many more engineers. This requires a long-term investment in education and skills and a clear STEM education strategy with careers provision at its heart.
‘The government’s investment in education and skills outlined in the Comprehensive Spending Review is a step in the right direction. However, some of the funding announced to skills in particular is money that has already been committed.
"In order to ensure that the UK has the number and quality of engineers to deliver on its ambitions to build back better and greener government must be ambitious and strategic in its approach to education and skills and ensure that more investment is forthcoming for what we consider to be a vital part of education - careers provision.
‘We are disappointed to learn that the government has decided to not take forward our call for £40 million additional annual funding for careers provision aimed at ensuring schools and colleges are better enabled to deliver meaningful careers provision to their students so they know about the green jobs of the future.
"The need for this additional and targeted funding was identified in our recent report ‘Securing the future: STEM careers provision in schools and colleges in England’ to support the drive to build back better and ’level up’ across the UK in a post-Covid world."
