23 March 2011

Chancellor calls for ‘the march of the makers’

budget report, osborne

Chancellor George Osborne concluded his budget announcement today (23 March) with the manufacturing-centric mantra: "We want the words 'Made in Britain,' 'Created in Britain,' Designed in Britain,' 'Invented in Britain' to drive our nation forward. A Britain carried aloft by the march of the makers. That is how we will create jobs and support families."

However, his budget received only a cautious welcome from manufacturing sector bosses who greeted it as a "down payment" on an economy more skewed to industrial development before warning on energy prices, education, regulation and investment.

Terry Scuoler, chief executive of the manufacturers' organisation EEF said the Chancellor recognised that The UK was in an international race for investment and that manufacturing is at the heart of this. "He made a crucial down payment on creating a stronger and more balanced economy with measures to boost investment in technology, research and development, and skills," he went on.

"However, for manufacturers, despite the encouraging measures on investment, the significant rise in energy bills threatened by the Carbon Price Floor is unwelcome.

Juergen Maier, Managing Director, Siemens Industry Sector, said: "Siemens welcomes the steps taken in the 2011 Budget to encourage investment within the manufacturing sector in new plant and machinery. Doubling the limit on capital allowances from 4yrs to 8yrs should help UK manufacturers invest to increase productivity and encourages the growth needed for the UK to maintain a competitive position in the global market."

Commenting on changes to capital allowances, EEF Director of Policy, Steve Radley, said:
"Government has recognised that the tax treatment of investment in the UK was antiquated. Extending the short life asset election is a simple way of recognising the true cost of modern machines with shorter lives. This will make the tax system more efficient and remove in part barriers to investment.

Chief economist Lee Hopley said that changes to the R&D Tax Credit Regime that raised the rate of the SME credit was essential to maintain the effectiveness of the UK R&D tax credit regime and would provide a much needed cash flow boost to innovative manufacturers."

On Enterprise Investment, she said that new extensions to the scheme closed the growth capital cap, that still didn't address a growing aversion by firms to equity finance.

Wewlcoming additional apprenticeship placements she said government needed to make sure the pipeline of suitable students from schools was also being addressed.

Radley said measures to cut regulation were helpful but needed to go further, moving beyond the focus on individual regulations to tackle whole areas of regulation and to develop a plan to stem the flow of new measures from Europe.

An increase in funding for the Green Investment Bank and the prospect of it raising further funds on capital markets was welcome news, he added, but would only make a real difference to the UK's low carbon future if it is targeted at Britain's best green economy prospects.

David Raistrick, UK Manufacturing Industry Leader at Deloitte, said: "I welcome the fact that the manufacturing sector has been openly recognised for its valuable contribution to the economy and particularly exports, in the Chancellor's Budget today.

"This has been one of the most supportive budgets for manufacturing for some years which will give the sector more confidence to invest and focus on growth.

"Increased R&D tax credits will encourage the sector to diversify and advance into low carbon manufacturing, going some way to helping the Government meet its ambition for the UK to be a global leader in the low carbon field.

"Increasing capital allowances for short life assets is another boost to investment in the sector whilst the cut in fuel duty was as welcome as it was surprising. The manufacturing sector has been ardent in expressing the view that the Government must simplify the tax system and it seems they have listened.

"This isn't a panacea for the industry which still faces an incredibly challenging year or two, but it is a positive step and will provide reassurance that concerns are being addressed."

Author
Ken Hurst

Supporting Information

Companies
Deloitte
Deloitte
Deloitte
EEF (Engineering Employers Federation)

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