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Rising energy costs causing major disruption for half
of companies
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1 in 5 companies believe energy costs will be an issue
for two years
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Almost a third of companies say NIC increase will
impact recruitment
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Three quarters of companies facing increased transport
costs
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Producer input prices are currently at 24%, the highest
since records began
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There are currently 93,000 live vacancies in the UK
manufacturing sector
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Total manufacturing investment is currently lower than
it was in pre-pandemic in 2019.
Britain’s manufacturers are calling on the Government to bring
forward a package of policy measures on the scale of those seen
during the worst points of the pandemic to prevent a permanent
scarring of the economy and help avert a severe recession,
potentially substantial insolvencies and job losses.
The call comes on the back of data from Make UK showing the
massive impact of rising energy costs on companies, together with
the cumulative effect of increases in other business expenses
such as increased transport costs and disruption alongside
National Insurance Contributions and the proposed increase in
Corporation Tax.
According to Make UK, the impact of the potent cocktail of
factors from the last few years, now being compounded by the
energy crisis, is as big a threat to manufacturers as the Covid
pandemic, if not greater.
As well as the impact of the rise in energy costs, almost three
quarters of companies (74%) say they are facing increased
transportation costs and more than four fifths (82%) reported
transport disruption is an issue for their business. Four in ten
companies surveyed said that disruption at the Dover Calais
crossing was causing either catastrophic or major disruption to
their business.
The measures Make UK is proposing include specific proposals on
energy, as well as a range of measures to aid cashflow, provide
greater access to Labour supply along with initiatives to
encourage investment, especially in energy efficiency
technologies.
Commenting, Chief Executive of Make UK, Stephen Phipson,
said:
“Whilst industry has recovered strongly over the last year, we
are clearly heading for very stormy waters in the face of
eyewatering increases in energy costs and a difficult
international environment. This threatens to shatter
expectations of a sustained recovery from the pandemic.
“Some of the factors impacting companies are global and cannot be
contained by the UK Government alone. However, just as it is
quite rightly taking measures to protect the least well off,
given the rate at which companies are burning through their
balance sheets just to survive, it must take immediate and
substantial measures to help shield companies from the worst
impact of escalating costs and help protect jobs.
“We need a shock and awe suite of proposals to protect viable
companies and jobs and we need them now. Manufacturers cannot
afford to wait for a functioning Government to get its feet under
the table.”
Among the immediate measures being proposed by Make UK
include:
- Reduce VAT on business energy bills from 20% to 5%
- Reverse the National Insurance Contributions increased from
2022
- Extend current business reliefs applied to other sectors to
manufacturing
- Extend business rates reliefs for both building improvements
and eligible plant & machinery
- Introduce a long-term capital allowance regime to spur
investment in green technologies and energy efficiency measures
to reduce energy consumption
- Make the Annual Investment Allowance permanent
- Undertake a full and fundamental reform of Business Rates
- Commission the Migration Advisory Committee to review and
revise the shortage occupation list by early 2023 at the latest
