Commenting on the Budget Statement, Stephen Phipson, CEO of Make
UK, said:
“Given the difficult economic circumstances the Chancellor faced,
as well as the intense speculation, this was a case of two steps
forward one step back for manufacturers.
“On the upside, companies will welcome the decision to expand
capital allowances for leased equipment and greater investment in
Apprenticeships for SMEs. Funding for skills, business support
and infrastructure, targeted at the Regional Mayors, will also
help support growth. The Chancellor should also be commended for
her personal intervention to kick start the consultation on the
business energy support scheme which is vital if we are to
address the UK's eye watering and uncompetitive industrial energy
prices.
“On the downside, however, restricting tax relief on salary
sacrifice and, a further increase in the National Living Wage
mean that manufacturers are again facing greater barriers to
successful recruitment and retention of skilled staff. The
electric vehicle road tax will also potentially hinder their
adoption and damage an automotive sector already facing a
challenge to meet its EV targets.
“The Government came to power promising that growth was going to
be its number one mission and, while it was dealt poor cards, we
have yet to see any significant upswing in our economic
performance and productivity. It is the private sector that will
provide this growth and create high value, high skill jobs and,
while the industrial strategy was a major signal of intent, we
need to see a much stronger focus on delivery.”
On the changes to Salary Sacrifice and increase in the
National Living Wage, Verity Davidge, Policy Director at Make UK,
said:
“The double whammy of restricting tax relief on salary-sacrificed
pension contributions and a further increase in the National
Living Wage mean that once again, the UK's manufacturers are
facing greater barriers to successful recruitment and retention
of skilled staff. Make UK had called for the Government to
consider how to use the tax system more effectively to support
employers to invest more in the health and wellbeing of their
workforce. Charging both employers and employees NICs on pension
contributions simply increases employment costs further and makes
it harder still to recruit successfully, instead of investing in
productivity. A further NICs rise for employers as a result of
this change following last year's increase will be difficult to
stomach for businesses who want to support the Government's
efforts to improve recruitment and employment.”
On the changes to the Apprentice Levy, , Executive Director for Make
UK, said:
"There is welcome news on skills, with extra investment for SMEs
hiring apprentices and greater flexibility in the Apprenticeship
Levy, helping cut training costs for those under 25s. At first
sight, the funding for the devolved authorities will be good news
for employers across the UK. While targeted packages on
engineering skills in the Industrial Strategy will be a boost to
manufacturers. However, cutting the expiry window to 12 months
under the Growth and Skills Levy - which limits how long unspent
levy funds can be used - will make it harder for some employers
to hire apprentices.”
On the Electric Vehicle Road Tax, Patrick Matthewson,
Senior Policy Manager, Energy & Environment, said:
“The Government's approach to EVs is creating more push than pull
factors for mass adoption of EVs which is preventing consumers
from making the much-needed transition to cleaner vehicles. The
measures introduced today will dissuade consumers, just as
manufacturers are facing increased pressure to make EVs 80 per
cent of total sales in 2030. Furthermore, the continued
inclusion of employee car ownership schemes (ECOS) within the
scope of Benefit in Kind rules will hamper companies' ability to
encourage employee use of EVs and, restrict stimulation of a
healthy, second-hand market. Taken alongside the introduction of
the Electric Vehicle Excise Duty (eVED), this will put a massive
block on consumers adopting EVs. This new charge is likely to
reduce demand for EVs as it increases their lifetime cost and so
manufacturers will need to respond through either lowering prices
or, by reducing sales of non-EV vehicles.”
On the decision to extend full expensing to leased
equipment, Fhaheen Khan, Senior Economist, said:
“This is a welcome move which shows Government is letting
businesses choose how they invest in modern technologies whilst
rewarding productive activities. It is important we continue to
monitor how capital allowances are being used to support growth
and ensure they remain competitive on the global scale which can
be done with further expansions to how full expensing is used in
the tax system.”
