Martin Hurworth, managing director of Harvey Water Softeners, reviews the Chancellor’s Autumn Statement from a UK manufacturing perspective.
Today the chancellor set out his plans for the UK in his Autumn Statement, giving us a glimpse of what the future may hold once Britain leaves the EU.
Behind all the political statements and figures there were some big announcements for UK manufacturers. Here are the crucial points to take away:
Mind the productivity gap
One of the statement’s central themes was the UK’s lagging productivity. It’s now 30% behind the US and Germany, 20% behind France and the difference between London and other regional cities is now the largest in the developed world.
Steps announced to close the productivity gap include the new National Infrastructure Investment Fund. It’s a catchy title for what is essentially £23bn of extra borrowing over the next five years that’s been made possible after the Chancellor threw off the shackle of committing to achieving a budget surplus by 2020.
Where will that extra money go? Well, £2bn will go towards R&D, backing science and high-tech innovation to help the UK become a ‘high-skill, high wage’ economy. That will be welcome news for many manufacturers, so long as the benefits are actually felt beyond the M25.
Good news for Britain’s makers
If you’re manufacturing goods in the UK and exporting overseas, there was more positive news for you. Not only have you had the weaker pound giving you an export boost over recent months, but the Autumn Statement also included a doubling of the UK’s export finance capacity. If you’re thinking of expanding into a new market, now might be the time.
Even better news if you’re seeking investment
An extra £400m is being put into venture capital through the British Business Bank; the government-backed business development bank which provides funding to help companies start up, scale up or innovate. That, plus support for a scheme to improve management skills in Britain’s businesses, should allow lean manufacturing to move from a buzzword to the baseline.
Taxes down, wages up
The National Living Wage will go up in April 2017 from £7.20 to £7.50. That, combined with the continued rise in the tax free personal allowance – up to £11,500 for the next financial year – should make many feel richer. However, higher wage bills have to be paid for somehow. The fact that corporate tax will fall to 17% by 2020 should help, as will the fact that the UK will by then have the lowest corporate tax of all G20 countries. Hopefully new investment and manufacturing jobs will quickly follow.
More money for new houses – £2.3bn in fact, for up to 100,000 new builds – could be a great opportunity for any manufacturer working in the construction supply chain. Fuel duty has been frozen for the seventh year in a row, although many had hoped it would be cut. And don’t overlook how the additional £1bn being invested in technology infrastructure like broadband and 5G could support further manufacturing growth.
His first Autumn Statement, and his last
To much amusement in the chamber, the Chancellor announced that he was using the Autumn Statement… to abolish the Autumn Statement. So his first will be his last as he moves the Budget from the spring to the autumn and keep it to just one per year – a sign of stability during what is now surely our period of ‘peak uncertainty’.
Overall, the Chancellor embodied the ‘safe pair of hands’ that the UK needs post-Brexit. However, it’s still not clear exactly where the country is heading.