Manufacturing warns Government against more taxes

Manufacturing News, Source : TheManufacturer.com
Published : 03 Oct 2002 8:55

The UK manufacturing sector has warned the Government against imposing any further taxes on business which might damage its competitiveness, as the first evidence emerged of the significant impact on jobs and profits from the forthcoming rises in National Insurance Contributions (NICs), due to be introduced next April.

According to the survey, carried out by the EEF (Engineering Employers' Federation), over half of UK manufacturing companies will reduce employment levels as a result of the increases, and more than a third intend to move costs abroad, a decision which threatens to accelerate the hollowing out of the UK's supply base.

EEF Director General, Martin Temple, commented: " The survey confirms our worst fears about the effect of yet another cost, on top of rising insurance premiums, increased pensions and the climate change levy. The government is playing a very dangerous game with manufacturing jobs and its future competitiveness.”

The survey of over 1000 companies was carried out as part of the EEF's third quarter business trends survey. It asked how businesses would react to the increase in employers' national insurance costs with a range of options. 30 per cent of companies indicated that they had not yet made a decision on the impact. The figures below relate solely to the companies that did express a view as to the action they would take.

Key findings:

Employer response to increase in employers' NICs

68% will absorb costs in lower margins

53% said they would reduce employment levels

32% will move costs abroad

54% forecast lower wage increases

24% of companies will cut their contributions to pensions

48% will seek to pass on costs to their customers

"Whilst they may not have huge impact on their own, the cumulative effect of these increases is leading to a substantianly less welcoming environment for manufacturing and preventing the vital investment necessary to improve our productivity" Mr Temple added.

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