Make UK comment on Spring Statement

Commenting on the Spring Statement today, Stephen Phipson, Chief Executive of Make UK, said:

“It is right that the Chancellor should prioritise help for the lower paid and those most in need at such a difficult time and business will understand this.

“However, Government cannot escape the fact that manufacturers are facing eye watering cost increases that are pushing many towards a tipping point and companies would have been looking for substantial business support measures to help alleviate these. In particular, the lack of action on energy costs for business is especially hard to fathom.

“It has been two years to the day since lockdown began and there is very little in today’s statement to support a sector that kept working throughout the pandemic, ensuring that there was food on the shelves, PPE for our NHS and medicines for the people who needed them. The promise of jam tomorrow with consultations through the summer and action in the Autumn will also be of little comfort for many who would have liked to have seen action and support immediately”.

“We have also yet to see a long-term economic vision that has enterprise, growth and innovation at its heart. Without adding a turbocharger for growth the Government risks leaving the economy spluttering along as a two stroke.”

On the incoming NICS rise Verity Davidge, Director of Policy at Make UK, said:

“Today was a missed opportunity for the Chancellor to act on concerns raised by employer and employee groups alike to delay the NICs hike until the economy is in a more robust position. The NICs increase is a tax on jobs with six in ten manufacturers saying it will impact recruitment and the majority planning to pass onto the customer leading to further inflationary pressures. The NICs increase is just one of many significant costs facing UK manufacturers and there will be a big question as to whether the UK is a competitive place to do business right now.

On the lack of support for business on energy, Verity Davidge, Director of Policy at Make UK said: 

“The lack of support for businesses to tackle spiralling energy costs is beyond disappointing, and deeply frustrating. With manufacturers seeing historically high energy bills, today was the Government’s chance to give businesses much needed support. Reducing the policy costs that make up a large part of overall electricity costs together with a boost to extending energy funds and grants, would have given manufacturers the best chance of cutting their energy bills and keeping their businesses afloat.

On potential reforms to the R&D tax credit scheme Fhaheen Khan, Senior Economist at Make UK, said:

“The R&D tax credit scheme is the most commonly used form of innovation support among manufacturers. Any changes to the scheme must be done in close consultation with the manufacturing sector, which is response for 64% of private R&D investment.

“Government must be careful not to throw the baby out of the bath water. While the scheme may not be perfect it should be reshaped and not radically reformed and any suggestions it should be scrapped entirely must be ignored. We look forward to continuing to work with Government to make the scheme work better for businesses of all sizes and ensure the UK can continue to compete on the global innovation stage.”

On commitment to look at investment tax cuts James Brougham, Senior Economist at Make UK, said:

“For what was a well-received policy at the time of its inception, the Chancellor has missed the significant opportunity of plucking some low-hanging fruit by way of adjusting some simple, yet fundamental, flaws in the Super Deduction scheme. Alluding to forthcoming investment tax announcements in the next Budget does little to support the industry now, when investment confidence is in dire need of bolstering.

“If the Government wants the economy to invest, innovate and grow now, the Chancellor must also now stand ready to afford confidence to the sector through longer-term policies that show individual businesses are supported in the investments they undertake that ultimately benefit people, places and communities.

“The lack of investment-spurring policy announcements today will send a worrying signal throughout industry that businesses are to bear the risk alone through this fragile recovery, certainly hampering investment in the rest of the year as the tidal wave of rising costs washes away hopes of a prosperous recovery.”

On the review of the Apprenticeship Levy, Bhavina Bharkhada, Head of Policy & Campaigns at Make UK, said:

“The decision to review the apprenticeship levy is well overdue and will be widely welcomed by manufacturers – the true champions of gold standard Apprenticeships.  It will be essential that the Government works with business to make the right calls on future reform so that we get this right. Over the last decade, the Government has committed to an apprenticeship system that is led by employers and it is important that it continues to uphold this principle. Any changes must ensure that funding for apprenticeships is sustainable over the long term, and that businesses are able use it to recruit and retain the apprentices they need.

“In the short term, allowing employers to use some of their levy funds to contribute to apprentice wages would immediately unlock greater investment in apprenticeships. Should the scope of the levy be broadened to include non-apprenticeship training, the Government must demonstrate how funding for apprenticeships would be protected and how manufacturers would be able to use this additional flexibility to access the right skills training for their businesses.”