Budget 2015: industry reacts

Posted on 25 Mar 2015 by Jonny Williamson

The Manufacturer rounds up the opinions of UK manufacturing as it reacts to Chancellor George Osborne's 2015 Budget yesterday.

George Osborne has revealed his final Budget before the upcoming General Election, stating that “Britain that is growing, creating jobs and leading the way. Britain is walking tall again.”

Key points include:

  • South West to receive £7bn in transport investment.
  • National Minimum Wage will rise by 20p an hour to £6.70 from October.
  • Corporation tax to be cut to 20% in two weeks’ time.
  • Fuel duty increase scheduled for September is cancelled.
  • Funding for a new national plan for ultra-fast broadband to nearly all homes in the country.
  • Automotive industry to receive £100m in investment in the race to driverless technology.
  • Eight new enterprise zones across Britain – including Blackpool and Plymouth.
  • North Sea oil industry to receive £1.3bn in support through four new measures.
  • New tax allowance to encourage investment in North Sea

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

Commenting on today’s Budget statement, Terry Scuoler, chief executive of EEF, stated: “His decision to bring forward compensation for industries facing vast and uncompetitive energy costs, such as steel makers, is welcome but the full package needs to be put in place as soon as possible. In addition he has committed to a stable and competitive tax regime, which we wholeheartedly support.”

Commenting on the Annual Investment Allowance and R&D Tax Credit, Lee Hopley, EEF’s chief economist, said: “This will ensure we don’t lose any momentum in the business investment recovery by withdrawing extra support through the tax system too soon. We now want to see a long term solution to creating a stable and competitive regime for investment announced later in the year.”

“It is good to see government continue to press ahead with support for world class technologies with new investment in science and innovation infrastructure. Further efforts to make the R&D tax credit more accessible for small claimants will be welcomed.

Lee Hopley, chief economist, EEF.
Lee Hopley, chief economist, EEF.

“This longstanding relief within the tax system has come to be valued by manufacturers for whom investments in R&D are becoming ever more important for business success. If these changes can bring more companies into the scheme and encourage higher levels of investment in innovation, that can only be good for UK plc in the long run.”

Commenting on measures to help the oil & gas sector, Paul Raynes, director of policy at EEF, said: “It is clear that the fall in oil prices has been a mixed blessing for manufacturing with firms exposed to delayed or cancelled investments in oil & gas exploration quickly feeling the effects through lost orders.

“Today’s announcement provides a solid signal from the Chancellor that government stands behind greater levels of activity in this important sector.”

Malcolm Webb, Oil & Gas UK’s chief executive, said: “Today’s announcement lays the foundations for the regeneration of the UK North Sea. The industry itself must now build on this by delivering the cost and efficiency improvements required to secure its competitiveness.”

“The new, simplified Investment Allowance will also provide a further engine for growth and investment and [the Chancellor’s] measures send exactly the right signal to investors. They properly reflect the needs of this maturing oil and gas province, and will allow the UK to compete internationally for investment.

“We also welcome the Government’s support for exploration announced today. With £20m for the newly formed Oil and Gas Authority to commission seismic and other surveys on the UK continental shelf (UKCS) a very positive step.

“Continued attention must be paid to improving the cost base and production efficiency of the UKCS in order to secure the maximum effect from today’s changes.

John McDonald, MD of OPITO – the oil and gas industry skills body – also welcomed the measures set out in today’s Budget: “The North Sea oil and gas industry has provided employment for hundreds of thousands of people and has raised the profile of UK skills and expertise around the world.

“It was critical that action be taken to encourage investment, which will contribute to the retainment of skills held within the industry’s workforce. This will ensure the industry continues to be a positive contributor and source of employment in the years ahead.”

John Cridland, director general, CBI.
John Cridland, director general, CBI.

John Cridland, CBI director-general, noted: “Stability and consistency are what businesses need to grow and prosper. This Budget sets the tone, providing a clear plan for fiscal health and growth.

“With business investment a crucial driver of growth, the Chancellor has signalled his intention to continue the Annual Investment Allowance. We want it to be made permanent in the Autumn Statement at £250,000 – this will fire the UK’s economic kiln by spurring smaller firms to invest in plant and machinery.

“The reduction of the headline rate of Corporation Tax to 20% next month, is a meaningful step in making the UK the most competitive tax regime in the G20 and will help to attract investment.”

Philippa Oldham, Head of transport and manufacturing at the Institution of Mechanical Engineers, said: “There are some welcome investments as part of today’s budget including the £60m earmarked for the a new Energy Research Accelerator in the Midlands and the £138m investment towards the UK Centre for Collaboratorium for Research in Infrastructure and Cities.

“These investments will hopefully help spur innovation and enable more joined-up cross sectorial thinking when developing new city infrastructure.

“The £100m investment into Research and Development for intelligent mobility is also welcome news. Autonomous vehicles have the potential to make driving safer, greener and more efficient, and could help boost the UK’s vital car manufacturing sector.”

John Leech, head of automotive at KPMG UK commented that the Chancellor’s affirmation of £100m investment in driverless car technology would be “warmly received by the automotive industry.”

“The UK is well placed to develop driverless cars compared to other EU countries. Pilots of the technology are already underway in Greenwich, Bristol, Milton Keynes and Coventry and we have Europe’s finest independent testing facilities for this technology at MIRA. Driverless cars will reduce congestion and improve safety and this investment will help to unlock these benefits in the next decade.”

David Keene, chairman of RDM
David Keene, chairman, RDM.

David Keene, CEO of RDM Group, welcomed the budget announcement of further funding. The Coventry-based company has designed and build the driverless Lutz pods, set to be used on the streets of Milton Keynes later this year. Keene said: “The UK is currently leading the way, but we have to move quickly and ensure we maintain that position by training the best engineers, encouraging innovative collaborations and ensuring we turn the vision into reality.

“Lutz will be a great showcase of what we have achieved with driverless cars to date. However, it is just the start and there’s plenty more to come.”

Ben Halford, chief executive of Surface Generation said the Budget failed to address the biggest issue facing SME manufacturers: “We’ve just secured £3.1m of new investment to help maintain our rapid growth. However, the biggest challenge we and many other businesses face is recruiting quality, skilled staff.

“Two years ago we had 20 staff and now we have 30 employees and are looking to increase this to 40.  However, there are not enough skilled engineers in the UK and now 15% of our workforce is made up of people from other countries.  The Government should relax immigration laws to make it easier to hire the right staff from outside of the EU irrespective of election pressures.

“Every year, the UK faces a shortfall of over 81,000 people with engineering skills in the workforce and this is threatening the country’s economic recovery.  This budget’s tax breaks are paid for by exports.  The country needs to double the number of entrants into engineering across all levels of qualification, but in the short-term it must be made easier for employers to recruit from outside of the EU.”

David Nicklin, MD at Birmingham-based Nicklin Transit Packaging, said: “The Chancellor began his speech by reporting on a Britain that is growing and creating jobs. This very much mirrors our own situation with circa 16% revenue growth achieved on March last year and a 14% increase in employment, buoyed by greater demand from existing customers and new contract wins.”

“SMEs like ourselves will welcome the proposed simplification of the tax regime and the long overdue review of business rates. What’s more, the reduction of road toll charges and freezing of fuel duty will particularly benefit logistics firms that rely on the UK road infrastructure to do business.”

Jim Moseley, Acting Director General, Food and Drink Federation.
Jim Moseley, Acting Director General, Food and Drink Federation.

Jim Moseley, interim director general at the Food and Drink Federation – which represents the interests of the UK’s biggest manufacturing sector – said: “Contributing £81.8bn in turnover, responsible for feeding millions, and employing 400,000 across the country, food and non-alcoholic drink manufacturing is at the heart of the recovering national economy. The drop in corporation tax, promise of increased investment funding and support for British farmers will be supported by food and drink manufacturers large and small.

“The doubling of UKTI export support targeting the flourishing Chinese market is a positive move but FDF would like to see more backing for exporting food and drink companies to bring us into line with our European neighbours. Food and drink exports have continually delivered year-on-year growth, bucking the total UK exports trend, and offer huge untapped potential.

“Plans to abolish National Insurance for under 21s this April and young apprentices next April are welcome. FDF is calling on the Government to go further and extend this to adult apprenticeships which are most needed in the UK’s food and drink. FDF has committed to increasing higher level technical apprenticeships in this high-tech, world leading sector by 20% by 2017.”

Following the announcement that there is to be a 20% pay increase for apprentices, Spencer Mehlman, MD of www.NotGoingToUni.co.uk, commented: “The recent National Apprenticeship Week has shown that more and more young Britons are looking at alternative routes to university and this real-wage increase can only help to make apprenticeships more viable to low-income families, breaking down the barriers to entry for millions of young people in the UK.”

David Brimelow of Manchester-based Duo UK, a polythene packaging manufacturer and supplier, commented:  “It was good to hear more on the Northern Powerhouse concept in the Budget – the fact that Manchester will now keep 100% of the additional growth in its business rates is a significant step in empowering the regions and rebalancing the country away from London and the financial sector.

“It’s really positive for businesses in the North West that Manchester is leading the way in the regional devolution process; having  the power to make decisions over crucial local infrastructure, coupled with the news on business rates,  means we have a real  advantage in generating additional growth.

“For me though, businesses can’t simply wait for politicians, whether in Westminster or locally, to take the lead, the business community itself has a real role to play. We need to work together to harness innovation and expertise, create something greater than the sum of its parts, and succeed in generating new prosperity for our region.”

Mark Morley, director of Manufacturing, OpenText
Mark Morley, director of Manufacturing, OpenText.

Mark Morley, director of Manufacturing at OpenText – world’s 10th largest software company, reflected:  “The Government’s commitment to rolling out ultra-fast broadband and elevating the UK to become a global leader in adopting Internet of Things-based technologies go hand-in-hand.

“To deploy IoT based technologies, you first need a high speed network to connect devices. The manufacturing industry will certainly benefit. Creating a completely connected economy – from connected power utilities, connected transport infrastructures to connected industrial equipment – will accelerate the growth of the British economy.”

Commenting on the announcement that there are to be greater freedoms for Research Institutes, Paul Foot, partner and patent attorney at Withers & Rogers, a leading intellectual property firm, said: “If the reality lives up to the promise, this move should help to put research institutes in a better position to attract and crucially, retain talent, invest in cutting-edge technology and re-invest commercial income.

“At the moment, Research Institutes are often beholden to set annual budgets that they have to spend in order to justify receiving the same amount in the following year. This creates a feast or famine scenario whereby teams constantly have to either attract funding or justify spending.

“While there is a lack of detail about what the Government is proposing, measures that will help to break this funding cycle and allow Research Institutes to be more certain about their funding future will be very welcome.

“In terms of talent, more certainty around funding should also lead to higher retention levels at Research Institutes and halt the current trend for researchers to leave the industry.”