Budget must underpin recovery with growth boost – EEF
Chancellor urged to bring forward support for energy intensive industries while bolstering investment and exports.
Britain’s manufacturers are pressing the chancellor to use the last Budget of this Parliament to avoid a pre-election giveaway and instead focus on measures which will continue to have a measurable impact on sustaining and underpinning economic growth.
Among a series of measures, EEF is calling for the compensation package for energy intensive industries to be brought forward to offset the crippling cost of energy which is a competitive threat and is undermining industries such as steel-making in the UK. The Department for Business has indicated that approval for such a measure under state aid rules from Brussels could come as early as September.
EEF’s latest quarterly review of the economic outlook for manufacturing paints a generally positive picture with projected growth of 1.7% in the sector this year, though the outlook for some sectors is more mixed. Risks still remain with a third of manufacturers expecting an improvement in economic conditions compared to two thirds at the same time last year. Seven out of 10 companies however see the UK as a competitive location in which to operate and EEF is urging the chancellor to cement the UK’s reputation as a place which is open for business with measures to boost investment and exports.
The manufacturers’ organisation is seeking support from the chancellor for a scheme that puts employers in the driving seat in the training and funding of apprenticeships. EEF has long called for a step-change in the way apprenticeships are funded and is recommending the introduction of a voucher model which would allow employers to purchase training from providers.
In addition, EEF is calling for an extension of the Annual Investment Allowance as part of a wider review of capital allowances, together with measures to encourage more companies, especially SMEs, to make use of research and development tax credits.
Terry Scuoler, chief executive, EEF said: “The outlook for the economy remains positive and manufacturers want to see a continuation of what has worked well in support of industry, from industrial strategies to a stable and predictable tax regime.
“While we have a long way to go to achieve a better-balanced economy, in his final Budget of this Parliament the chancellor can still do a great deal to underpin growth across manufacturing and industries which are critical to long term growth.
“Bringing forward critical compensation for energy intensive industries will send a very positive message to key industries and any further support to efforts to boost exports and investment will be equally welcome.”
EEF’s key submissions and recommendations include:
1. Introduce the final element of the compensation package for energy intensive industries as soon as possible. BIS has indicated this could come as early as Autumn following state aid approval.
2. The structural review of business rates should report within a fixed timeline to reduce uncertainty arising from the outcome. The tax should continue to be calculated on the basis of individual property valuations while the valuation of plant and machinery should be examined as it is deterring valuable investment and productivity improvements.
3. Back employer control of Apprenticeship funding through the introduction of a voucher system to create a truly demand-led approach to buying training provision.
4. Provide a further boost to the funding for and, promotion of, export support through UKTI.
5. Improve access to the R&D tax credit, especially for SMEs, by re-designing the application process to reduce complexity and administration.
6. Retain the annual investment allowance at its current rate of £500k and announce a full scale review of the capital allowance system.
