Could a scrappage scheme for old kit boost investment in automation?

Posted on 4 Jun 2020 by Jonny Williamson

The UK government has been called on to launch a new scrappage scheme for outdated IT, plant and machinery equipment to incentivise cash-strapped businesses to invest in automation and digitisation to boost output and exports.

Make UK has put forward the case that increasing investment in automation and digital technologies would help manufacturing businesses recover more quickly from the disruption caused by the Covid-19 pandemic.

In its call, Make UK also suggested that such a scheme should run hand-in-hand with a programme to encourage UK consumers to buy a new, more environmentally friendly car through a government-funded scrappage scheme, delivering a much-needed boost to the automotive industry.

A voucher-style system where government gave a contribution of around £5,000 for each new car, would deliver a healthy incentive for households to upgrade, with industry contributing the trade-in value of the old model.

This double cash injection would give businesses the head start they need as they struggle to replenish their order books and get production up and running again.

Up-front labour and raw material costs are proving a block to many factories which have been forced to close or run on lower capacity over the past few months since the Covid-19 outbreak.

Others which shifted to making much needed medicines, sanitisers and vital medical equipment to support the NHS and combat the spread of the disease also face considerable costs as they revert their factories to normal production.

Now, as we come out the other side, the government needs to introduce innovative schemes which can help businesses recover quickly, noted CEO of Make UK, Stephen Phipson, adding that technological investments were critical to that objective.

He concluded: “To survive, businesses will need to take every advantage they can of the latest technologies and equipment to boost productivity to get back on track in the coming months.

“The UK’s manufacturing sector has always been agile and has shown in the last few months just how quickly it can adapt, but as a growth providing sector we must emerge stronger and better equipped to compete in the global trade environment to be able to do our bit effectively in the country’s economic recovery.”