Reaction to the UK Chancellor's Budget Statement

5 mins read

UK Chancellor of the Exchequer Jeremy Hunt announced the Budget Statement today and there was also some announcements made prior to it for manufacturing.

Among the announcements was that leased machinery will become part of the Full Expensing capital allowance. Draft legislation will be published to extend Full Expensing – a £10bn tax cut for business every year to help them invest for less money – to leased assets when affordable to do so, strengthening the capital allowance regime.

As part of Full Expensing, which began in April 2023, companies subject to UK corporation tax can receive a 100% first year tax deduction for expenditure they incur on qualifying plant or machinery, reducing the in-year cost of plant or machinery by 25%. The temporary measure previously announced was the Super Deduction – before the government subsequently announced the relief will now remain in place permanently.

On the consultation on leasing, Fhaheen Khan, senior economist at Make UK, said: “Making full expensing permanent was one of the single most supportive changes to the treatment of capital expenditure for UK businesses in the last decade. Manufacturers are one of the biggest users of capital allowances and, widening access to leased assets highlights the Government’s commitment to explore new ways to ensure the UK is an attractive location to invest.

“Extending full expensing to leased assets will especially support smaller manufacturers while, further down the line, the Government should explore whether it can be expanded even further to support sustainability goals by covering refurbished, second-hand technologies.”

Also announced as part of the Budget government also announced £360m to boost British manufacturing and R&D. This included a £200m joint investment in zero-carbon aircraft technology to develop a more sustainable aviation sector.

The government also announced almost £73m in combined government and industry investment for cutting-edge automotive R&D projects to support the development of electric vehicle technology, delivering highly skilled jobs and cementing the UK’s position as a global hub for EV manufacturing.

Supported by more than £36m of government funding awarded through Advanced Propulsion Centre UK (APC) competitions, this includes four projects which are developing technologies for the next generation of battery electric vehicles, making them more efficient and competitive, led by companies including automotive manufacturers YASA and Empel Systems.

This funding is also supporting a project led by Integrals Power, developing and scaling up high-performance battery systems ahead of testing their mass-commercialisation, enhancing safety, power density, and cost-efficiency.

These projects build on the record of the government’s established automotive initiatives. The Autumn Statement provided future certainty, announcing over £2bn across five years from 2025 to unlock investment in the manufacturing and development of zero emission vehicles, their batteries and supply chain. The government will ensure a seamless transition to the new Auto2030 programme which will deliver support in future, and investors are still able to apply to the current schemes.

The significant funding package for R&D and manufacturing projects announced is targeted to support sectors where the UK is or could be world-leading and is designed to unlock investment from the private sector by providing certainty to investors - supporting the government’s priority to grow our economy by protecting existing and creating new jobs, so we can deliver the long-term change our country needs to deliver a brighter future.

Make UK

Stephen Phipson, chief executive of Make UK, said: “Industry will welcome this statement which builds on a number of other key announcements in recent months. The Chancellor clearly sees manufacturing as a key sector in the economy of the future and is slowly, but surely, putting in place the building blocks of an industrial strategy.

“The extension of full expensing to leased assets will benefit smaller companies in particular and, we would urge draft legislation to be brought forward as soon as possible so that this measure can be made permanent at the earliest opportunity.”

On the extension of the Recovery Loan scheme, Faye Skelton, head of policy at Make UK, said: “By extending the scheme, the Chancellor has extended a welcome olive branch to small businesses in the UK in an act that recognises their strategic importance to the economy.

"Smaller manufacturing businesses account for the vast majority of the UK manufacturing base  and this will provide them with a vital safety net to ensure their long-term viability."

Made in Britain

Made in Britain CEO John Pearce focused on British manufacturing workers in his reaction: "Our skilled workforces are the backbone of the UK manufacturing sector, so at Made In Britain we support the Chancellor's decision to reduce the tax burden on British workers via the second reduction in National Insurance in a year.

"At the same time, inflation and the cost-of-living crisis have produced wage pressures that affect the competitiveness of UK businesses across the economy. As such, we welcome any effective measures to bring, and keep, inflation within the government’s target and it is very welcome that the OBR forecasts that this is being achieved.

"Devolved powers for business growth in regions is also to be welcomed - because manufacturing is all over the country and supports high quality employment with meaningful work that can help raise the esteem of business communities all over the UK. Across the manufacturing sector, members of Made in Britain are looking to the government to deliver a competitive, efficient market through light touch regulation that supports the sector's growth and eases barriers to export trade."

Automotive sector

Mike Hawes, SMMT chief executive, said: “Government has been keen to assure the UK automotive industry’s competitiveness, with support for EV development and manufacturing – including £2.1 billion in autumn’s Advanced Manufacturing Plan – but there is little to help consumer demand.

"Today’s Budget is, therefore, a missed opportunity to deliver fairer tax for a fair transition. Reducing VAT on new EVs, revising vehicle taxation to promote rather than punish going electric, and an end to the VAT ‘pavement penalty’ on public charging would have energised the market. With both Government and industry having statutory requirements to deliver net zero, more still needs to be done to help consumers make the switch.”

ASG Group

Among potential supplier beneficiaries are suppliers like CNC machining aerospace conglomerate ASG Group.

The spotlight of this funding is on pioneering initiatives, including a £40m injection into a Marshall ADG Ltd led project focused on developing zero-carbon aircraft engine technology. Furthermore, approximately £96m is set to fuel Airbus-led projects, marking a significant leap forward in sustainable aviation solutions.

Simon Weston, group managing director of ASG Group, said: "This injection of funds aligns perfectly with ASG Group's commitment to innovation and sustainability in aerospace. We are poised to leverage these investments to drive ground breaking advancements in our industry."

MD of ASG Arrowsmith in Coventry, Jason Arrowsmith, applauded the collaborative nature of these initiatives and said: "The joint government and industry funding creates a powerful synergy. It enables us to pool resources and expertise, fostering a collaborative environment that accelerates technological breakthroughs."


Beatrice Barleon, head of policy & public affairs at EngineeringUK, said: "We welcome the Government’s commitment to invest in crucial sectors, such as engineering and technology, and Small to Medium Sized Enterprises in the UK, including for example the Green Industries Growth Accelerator (GIGA). We also share the pride that the Chancellor clearly felt when talking about how the UK is becoming a leading force in the technology sector, comparing it to the Silicon Valley.

“However, given all this, we are extremely disappointed that there is no mention of the need to invest more and focus on skilling the future workforce. Without more skilled young people coming through the UK education system, UK businesses will struggle to grow and stay competitive compared to other countries.

“There is an acute STEM teacher shortage affecting young people’s STEM education and therefore their ability to pursue careers in these vital sectors, yet there was no mention of teachers and how the Government intends to support them. There was also a lack of focus on how crucial training routes, such as apprenticeships, will be enabled to grow into the future, and how this will be funded.

“We renew our ongoing call for the Government to develop a clear and properly funded STEM skills plan. This should include investment in careers outreach and education, apprenticeships for young people aged 16-19 and commitment to sustaining existing funding levels for STEM teacher professional development.”