EEF economist lists top manufacturing enemies

Posted on 9 Mar 2011 by The Manufacturer

Over the weekend, the Prime Minister committed the Government to "taking on the enemies of enterprise":

“…for over a decade in this country the enemies of enterprise have had their way.

Taxing. Regulating. Smothering. Crushing. Getting in the way.

So I can announce today that we are taking on the enemies of enterprise.

The bureaucrats in government departments who concoct those ridiculous rules and regulations…The town hall officials who take forever with those planning decisions…The public sector procurement managers who think that the answer to everything is a big contract….

There’s only one strategy for growth we can have now…

…and that is rolling up our sleeves and doing everything possible to make it easier for people to start a business and to grow a businesses.”

While the wags may have focused on the alliterative powers of the PM’s speech writer, we support the PM’s focus on doing everything to make it easier for people to start and to grow a business in the UK.

That’s why we’ve put together a Manufacturers’ Most Wanted – the top ten ‘Enemies of Enterprise’ for manufacturers planning to grow over the next 5-10 years.

As we said yesterday, the Government can’t take growth for granted – not all growth is equal and it doesn’t have to happen in the UK.

If the PM lives up to his words and tackles these ‘Enemies of Enterprise’, he can ensure the UK captures all the benefits – the jobs, the investment and the exports – that the right type of long-term, balanced growth in manufacturing can generate.

1. Lower Capital Allowances: Inefficiently taxing investment in the UK.
The UK’s capital allowance regime is inefficient, outdated and uncompetitive, and the government’s plans to lower the level of allowances from 20% will add to the cost of investing in technology and growth in the UK.

2. Tax Complexity & Uncertainty: Raising risks to long-term investments in the UK.
The government’s departures from its ‘New Approach to Tax Policy Making’, such as the decision to retain revenues from the Carbon Reduction Commitment, have unnecessarily increased uncertainty for firms making long-term investment decisions.

3. The Carbon Reduction Commitment: Unnecessarily & inefficiently taxing production in the UK.
Combined with the carbon floor price and the CCL, the CRC provides triple taxation of carbon, inefficiently raising the cost of producing in the UK.

4. The Climate Change Levy: Taxing electricity consumption at 10x EU minimum.
The EU requires the UK to have the CCL, but the UK has unilaterally chosen to impose a levy 10 times the EU minimum.

5. The Lack of Competition in Lending: Entrenching a risk-averse approach to lending to UK manufacturers.
Not enough competition means it’s harder for growing firms to secure the loans they need on reasonable terms and tougher to switch providers when service standards aren’t up to scratch.

6. The T&C’s Attached to Bank Lending: Capping the flow of finance to growing UK manufacturers.
From personal guarantees to impossible covenants, the range of T&Cs attached to lending places a cap on manufacturers’ ability – and willingness – to invest in the UK.

7. Inadequate Impact Assessments: Consistently underestimating the burden of red tape on UK manufacturing.
Poor Impact Assessments – such as for the Default Retirement Age and the Carbon Floor Price – fail to accurately assess the additional and cumulative impact to business of UK and EU regulations. These assessments need to improve if the government is the scale of the barriers to private sector growth.

8. The Default Retirement Age: Reducing labour market flexibility.
Rapid introduction leaves firms scrambling to comply with red tape and complicates plans to manage workforce skills.

9. 10 Years of Tinkering with Apprenticeships: Making apprenticeships and funding unstable.
The lack of stable funding and overuse of centrally-planned targets have made good-quality apprenticeships harder to come by for both students and manufacturers.

10. Failure to Deliver STEM Skills in Schools: Shrinking the future workforce of manufacturing.
Without a solid foundation in STEM skills, students are less likely to have the skills needed to begin an apprenticeship, pursue an engineering degree or even seek a career in manufacturing.