Daniel Miller, Managing Director of CoolKit is imploring Chancellor Rachel Reeves to show the sector a plan when she delivers her Budget this week (26 November).
Sadly, these virtues have all been in short supply in the run up to her big Commons showpiece and that has helped create the uncertain environment that UK manufacturers like CoolKit are currently forced to operate in.
Uncertainty in the economy means less demand as businesses delay placing orders, holding on to their cash instead as they wait to see which way the wind blows.
It all comes down to confidence and that has taken a hammering as businesses have watched U-turns and listened to conflicting, inconsistent messaging with increasing frustration in recent weeks.
The impact of uncertainty is there for all to see. In early October the Institute of Directors (IoD) revealed that business confidence had fallen to a new record low.
And The Federation of Small Businesses (FSB) has warned that thousands of businesses could close over the next year as a result of rising tax bills and falling revenues. Its survey revealed 30% of small firms expect to downsize or shut.
All of this makes it even more crucial that the Chancellor delivers the certainty that businesses need in order to plan for the future, as we strive for the growth and productivity that she and the country are crying out for.
Stability and confidence matter. You can see what happens when these are shaken. As a business CoolKit is still feeling the effects of last November’s rise in employers’ National Insurance contributions. That extra burden, coupled with the increase in the minimum wage, added around £400,000 to the company’s costs.
“We’ve frozen recruitment since that Budget pronouncement. Fewer people employed results in lower tax revenue. We need growth to drive investment,” said Dan. “We have all been told to be braced for tough decisions this autumn. That is no surprise as the Chancellor looks to tackle a shortfall in the government finances estimated to be around £20bn.
“But we need her to be clear about those decisions, to spell out how she is going to raise the funds she needs, to show us the plan for the economy and to stick to it; not return in six months, saying: ‘We haven’t achieved what we set out to do so we’re coming up with yet another one’.
“So, it comes down to ‘clarity’ over what the plan is, ‘commitment’ when it comes to its delivery and ‘consistency’ in doing the right things to move the country and the economy forward. Put those three things together and there is a better chance we will see growth. Getting inflation down would also help by triggering another interest rate reduction.”
Dan added that the government also needs put some meat on the bones of its Industrial Strategy and the Budget would seem an ideal time to do that.
The ten-year plan was announced in the summer. But without tangible action, some clear timelines and funding, it is hard to see what the benefits will be. As a manufacturing business based in Lancashire, CoolKit has seen no real change in its relationship with government since it was unveiled.
The government also needs to grasp the nettle when it comes to the complexity of our tax system. With such a strong majority the government should look to get started on that journey.
And R&D is another area where the Chancellor could provide more support for companies as they look to harness technology and AI to improve productivity and drive growth.
Skills remain a thorny issue, with the need to clear away uncertainty that surrounds Level 7 apprenticeships, coupled with clarity over the levy system.
“We operate in uncertain times,” added Dan. “But, like businesses across the country, we continue to keep moving forward, committed to doing the things that will make us stronger.
“As a result, we are forecasting business growth in 2026, although it feels like it will be achieved in spite of, rather than because of, what the government is doing.
“Sometimes it feels a little bit like swimming uphill! The Chancellor has a chance to change that feeling on November 26. Here’s hoping she takes it.”
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