Autumn Statement must boost innovation & investment

EEF has urged the Chancellor to use his Autumn Statement to tackle the fallout from political uncertainty and reassure nervous businesses with measures aimed at boosting investment and growth in support of a new industrial strategy.

EEF made the call in its Autumn Statement submission to the Chancellor and comes after a survey showing 1 in 4 manufacturing companies are holding off investment plans amid increased political uncertainty.

According to the organisation, while the Autumn Statement must reinforce a commitment to prudent financial planning, the Chancellor must signal a moderate financial stimulus package aimed at boosting innovation and export support for UK manufacturers.

It should also aim to remove bottlenecks holding back capital investment and push through further infrastructure commitments – from improved digital broadband connectivity to local road schemes.

However while EEF supports the government’s decision to abandon the budget surplus target, the Chancellor faces a balancing act in avoiding an overly expansive fiscal stimulus programme while the consequences of Brexit remain uncertain.

Instead, the government should retain its ability to deploy heavier fiscal artillery next year if evidence points to a sharp slowdown in UK economic activity.

Terry Scuoler, CEO, EEF
Terry Scuoler, CEO, EEF.

Chief Executive of EEF, Terry Scuoler explained: “The government’s commitment to an industrial strategy has come at the right time with the new administration setting a clear and welcome precedent.

“The Chancellor has a significant opportunity to put a down payment on this through a range of measures which prioritise productivity growth, boost investment in digital technologies and supports exports.

“The whole of government must get behind UK businesses and demonstrate a clear appreciation of the need to back such a strategy, backing sectors while also tackling systemic problems such as skills, energy costs and infrastructure weaknesses. Creating such an environment will instil confidence in manufacturers to pursue their business ambitions, anchoring investment in the UK, and ensuring that we take early advantage of new digital technologies.”

The Autumn Statement should support manufacturers’ own priorities with an industrial strategy that has four key themes at its core: a more productive and flexible workforce; more reliable and resilient infrastructure; a lower cost of doing business, and better support for growing businesses.

Autumn Statement: specific recommendations include –

1.     Better support for growing businesses

  • Extend the scope of the R&D tax credit to allow for more process innovation by SMEs
  • Increase the level of the R&D tax credit under the Large Companies scheme
  • Establish a Technology Catalyst Fund to support the early adoption of technologies that can deliver productivity gains
  • Introduce a review of the current capital allowances regime for investment
  • Increase funding for export support

2.     Delivering a more productive and flexible workplace

  • Build on improvements in the design of the Apprenticeship Levy
  • Abolish plans to introduce the immigration skills charge
  • Alter the tax system to encourage employers to pay for private health care

3.     A more reliable and resilient infrastructure

  • Establish a roadmap for full delivery of full fibre broadband to the premise rollout
  • Expand the scope of the roads fund beyond the strategic road network
  • Prioritise local infrastructure projects

4.     Lower the cost of doing business

  • Remove plant and machinery from business rate calculations
  • Support company pension schemes with measures to make them more affordable
  • Outline a clear timetable to remove the Carbon Price Floor
  • Take further action to reduce the energy price gap for steel producers