Budget reaction

Posted on 24 Mar 2011 by The Manufacturer

Leading names associated with the manufacturing industry share their views on yesterday's Budget

Comment on this story to add your own views or send them to [email protected]


Enterprise Zone – London

Andreas J Goss, chief executive, Siemens plc, said:

“Siemens welcomes the announcement in the Budget of a new Enterprise Zone in London – we backed the call for an Enterprise Zone centred in Newham, where we are building the Siemens global centre for urban sustainability. If the incentives are right, this new zone could ensure sustainable employment and a lasting economic legacy for London.”

Green Investment Bank

Andreas J Goss, chief executive, Siemens plc, said:

“Siemens is very pleased that the Chancellor has announced an additional £2bn of capital funding (to a maximum of £3bn) for the Green Investment Bank and accelerated its implementation to 2012. This should put the Bank on a secure footing, giving access to finance that is essential to for the deployment of low carbon, infrastructure projects.”

Investment in manufacturing

Juergen Maier, Managing Director, Siemens Industry Sector, said:

“Siemens welcomes the steps taken in the 2011 Budget to encourage investment within the manufacturing sector in new plant and machinery. Doubling the limit on capital allowances from 4yrs to 8yrs should help UK manufacturers invest to increase productivity and encourages the growth needed for the UK to maintain a competitive position in the global market.”

Ian Brinkley, director of socio-economic programmes at The Work Foundation, said:

“The Budget provided some welcome boosts to support enterprise, R&D and science, green investment, and apprenticeships for young people. It would have been better to have done more for growth in all these areas rather than cut corporation tax. Moreover, Enterprise Zones are not an effective way to rebalance regional growth. Much more will have to be done to avoid a two nation recovery.

“Over the year to December 2010 public sector employment fell almost twice as much in Northern England than Southern England. Much of Northern England has a higher share of jobs in the public sector and over the past decade has been more dependent on public sector job growth than in the South. Now these sources of job creation are being removed at a faster rate than in the South, the private sector in the North will have to generate even more jobs. It remains unclear how the government can achieve this goal.”

Dave Croston, partner and manufacturing sector specialist at Withers & Rogers LLP

“The 10% reduction in the rate of tax payable on income from patents, originally announced in the Pre-Budget Report in 2009, has been reconfirmed and companies will start to benefit from it from April 2013. By allowing companies to increase the commercial gain from their investment in innovation, the Government is adding to the case for businesses to base their R&D and grow their businesses in the UK. This will help to improve our overall competitiveness.

“In the UK, we have a wealth of advanced manufacturing knowledge in the form of small businesses that are currently people light but rich in know-how. Wouldn’t it be nice if these companies choose to stay and grow their businesses here.

“The Chancellor also announced an additional £100 million for new science facilities and extended the research and development tax credits available to small companies, rising from 175% to 200% this year, and 225% next year. This will be a boost for technology businesses and sends the right message to the many embryonic businesses that have the potential to underpin our economic recovery.”

Deloitte UK Manufacturing Industry Leader David Raistrick said:

“I welcome the fact that the manufacturing sector has been openly recognised for its valuable contribution to the economy and particularly exports, in the Chancellor’s Budget today.

“This has been one of the most supportive budgets for manufacturing for some years which will give the sector more confidence to invest and focus on growth.

“Increased R&D tax credits will encourage the sector to diversify and advance into low carbon manufacturing, going some way to helping the Government meet its ambition for the UK to be a global leader in the low carbon field.

“Increasing capital allowances for short life assets is another boost to investment in the sector whilst the cut in fuel duty was as welcome as it was surprising. The manufacturing sector has been ardent in expressing the view that the Government must simplify the tax system and it seems they have listened.

“This isn’t a panacea for the industry which still faces an incredibly challenging year or two, but it is a positive step and will provide reassurance that concerns are being addressed.”

Food and Drink Federation Director General Melanie Leech:

“The Chancellor has made a number of important budget announcements that are positive for our industry and its potential for further growth to support economic recovery. In particular we strongly support the decision to extend Climate Change Agreements to 2023 on which we have been lobbying the Government in recent weeks, in view of the real incentive that they provide for our members to reduce carbon emissions. We also welcome the restoration of the Climate Change Levy discount on electricity to 80% from 2013.

“Food manufacturers will continue to make every effort to reduce their environmental impacts through the FDF’s Five-fold environmental ambition and to work with Government to improve the sustainability of food production.

“We are also pleased to see the planned increases in fuel duty scrapped and a fuel price cut effective from tonight. Food manufacturing is heavily dependent on fuel and any increase imposes an enormous burden on our members. Earlier this month, together with partner organisations, we wrote to the Chancellor to express our concerns about the rising fuel cost situation, and we are pleased that an increase will not now happen.”

EEF, the manufacturers’ organisation

Terry Scuoler, Chief Executive of EEF, the manufacturers’ organisation said:

“Today the Chancellor gave a clear recognition that we are in an international race for investment and that manufacturing is at the heart of this. He made a crucial down payment on creating a stronger and more balanced economy with measures to boost investment in technology, research and development, and skills. The Growth Review has now started to deliver tangible process in removing the barriers to growth, investment and job creation in the UK

“However, for manufacturers, despite the encouraging measures on investment, the significant rise in energy bills threatened by the Carbon Price Floor is unwelcome. The next stage of the Growth Review must seek to develop a more co-ordinated and cost effective approach to creating a low carbon economy.”

Commenting on the changes to capital allowances, EEF Director of Policy, Steve Radley, said:

“Government has recognised that the tax treatment of investment in the UK was antiquated. Extending the short life asset election is a simple way of recognising the true cost of modern machines with shorter lives. This will make the tax system more efficient and remove in part barriers to investment.

Changes to the R&D Tax Credit Regime – Commenting, EEF Chief Economist, Ms Lee Hopley, said:

“Raising the rate of the SME credit was essential to maintain the effectiveness of the UK R&D tax credit regime. The uplift will provide a much needed cash flow boost to innovative manufacturers.”

Commenting on Enterprise Investment Scheme, EEF Chief Economist, Ms Lee Hopley, said:

“Whilst the extensions get us closer to addressing the growth capital cap this still doesn’t address growing firms aversion to equity finance. We hope the government looks at extending this scheme to debt in future changes.”

On additional apprenticeships, EEF Chief Economist, Ms Lee Hopley, said:

“Whilst additional apprenticeship placements are welcome, government needs to make sure the pipeline of suitable students from schools is also being addressed.”

Measures on Regulation, EEF Director of Policy, Steve Radley, said:

“The Budget contained some helpful measures on regulation. But the government now needs to go further and set out a plan that will leave the burden of regulation lower by the end of this Parliament. It needs to move beyond the focus on individual regulations to tackle whole areas of regulation and to develop a plan to stem the flow of new measures from Europe”

On the Green Investment Bank, EEF Director of Policy, Steve Radley, said:

“The increase in funding and the prospect of the Bank raising further funds on capital markets is welcome news, but will only make a real difference to the UK’s low carbon future if it is targeted at our best green economy prospects. The Bank’s investment remit must now be maximised to ensure it includes low carbon manufacturing of all types, as well as decarbonisation investments for existing manufacturing.”
Single Tier Pension, EEF Director of Policy, Steve Radley

“It is an important building block in restoring confidence in pension saving – crucial if auto-enrolment and the National Employment Savings Trust are to be a success. The proposal for a single tier pension has the potential to deliver a workable balance between reducing pensioner poverty, controlling the costs and supporting the incentive to save for a pension.

“But the cycle that has beset past pension reform – a new initiative subsequently diluted – must be broken. The UK needs a period of pension stability. As well as looking for assurances the new pension will not be eroded over time we will want to see stability in the associated tax and NIC arrangements to maintain incentives for pension saving.”

Ian Godden, Chairman of A|D|S, said:

“The UK aerospace, defence and security sectors support the Government’s drive for growth and we offer the Chancellor the means to boost the economy and British exports in the future. Our members are already world-leading, successful manufacturing and services businesses that provide a strong foundation on which our nation can build, especially in the light of recent strong performances from the manufacturing sector. Further Government support to create the right climate for these sectors to thrive in the years ahead will go a long way towards meeting the country’s economic, employment and exporting needs.”

“Measures to support small businesses, start-ups, exports and manufacturing firms announced today are very welcome and will go some way towards meeting the Government’s growth aims.”

On proposed changes to Air Passenger Duty, Mr Godden remarked:

“Aviation already pays several times its environmental costs in tax. The Government’s plans to examine reforms to the banding of Air Passenger Duty should be expanded to a wider review of aviation taxes and where the money raised is spent. These charges in future should seek to boost UK international competitiveness by reversing the trend of using flying as a cash-cow. Instead the Government should seek to ensure aviation pays its way, but no more, and to use some of the money raised by aviation taxes to aviation research and development.

“An aircraft today produces 70 per cent less carbon dioxide than its equivalent 50 years ago and a modern aircraft such as the Airbus A380 is more fuel efficient per passenger kilometre than a hybrid car. Further investment to supplement industry funding will deliver even greater environmental benefits where an ever-increasing tax on flying will not.”

On science investment, including in the space sector, Mr Godden continued:

“We welcome the inclusion of the International Space Innovation Centre at Harwell in the £100m investment in new science facilities. The space sector is an unsung success story, supporting 70,000 jobs in the UK and generating £7.5 billion per year to the economy. Industry and Government have in place a shared plan to grow this to £40 billion per year by 2050 and this additional investment will assist in achieving that aim.”

On defence spending Mr Godden said:

“While we welcome the confirmation that the current military operations in Libya will be funded from the Treasury reserve we are disappointed that the sustained fall in defence spending has not been reversed. With defence making up 10 per cent of UK manufacturing it is a mystery as to why the Government does not seize the significant opportunity that long-term, technology-driven investment in the sector represents.

“According to research from Oxford Economics a £100 million investment in defence delivers £227 million to the UK economy as well as important equipment to our armed forces, long-term industrial capabilities and high-quality, sustainable jobs. Increased funding to defence would boost our armed forces and our economy at the same time.

“Defence spending has halved as a proportion of GDP and of Government spending over the last 20 years and we expect further cuts beyond those announced in last year’s Strategic Defence and Security Review. But more worrying is that defence research and technology has been cut drastically in such a way that many doubt that the Government will be able to fulfil its Force 2020 objectives.”

On further skills and education investment Mr Godden said:

“We welcome the increased funding of technical colleges and the training that they provide, which is coordinated with industry. This will help deliver a highly-skilled workforce for the future, which our sectors will most certainly need. As world-leading industries and major employers of apprentices we welcome measures to further boost this scheme, especially for higher level apprenticeships.”

On support to small, innovative and manufacturing businesses Mr Godden commented:

“The small companies R&D tax credit boost is recognition of the contribution made by small firms to high-tech supply chains and will increase their ability to maintain innovation for the nation’s long-term benefit. Along with the doubling of the limit on the capital allowances for short life assets from four years to eight years this will be a welcome boost to UK manufacturing, of which aerospace, defence and security represents a quarter.”

On the Green Investment Bank Mr Godden said:

“Support from the Green Investment Bank should be available to manufacturers, in particular in the aerospace sector. As our aerospace companies deliver further improved environmental performance support from the Government and private investors will be crucial if the UK is to retain its position as number one in Europe and second only to the US globally in aerospace, producing new aircraft today that are more fuel-efficient than a hybrid car. The UK aviation sector has a CO2 roadmap in place demonstrating how new technology will meet the predicted threefold rise in passenger demand to 2050 whilst simultaneously delivering a reduction in carbon dioxide emissions back to 2000 levels. This new technology will require long-term investment and the Green Investment Bank, alongside industry and Government, would be a common-sense source for funding given the environmental benefits that would flow from it.”