EEF has today called for new Chancellor George Osborne to introduce far reaching tax reforms to amend a regime which “is currently tilted against manufacturing and stands in the way of promoting high-tech investment and innovation.”
EEF said the new system must:
1. Encourage manufacturing investment, reflecting the true cost of modern machinery and promoting innovation;
2. Be internationally competitive to ensure larger manufacturers remain headquartered in the UK and encourage inward investment; and
3. Provides predictability and certainty, including HM Treasury and HMRC consulting earlier and more effectively with a wider range of businesses to avoid any unintended consequences.
“The current tax system is not fit for purpose, is close to breaking and simply cannot deliver an economy that allows the UK to pay its way and generate the wealth necessary to repay our debts,” says EEF director of policy Steve Radley.
“But the way we reform the tax system is just as important as recognising the need for change. Rather than narrow tax cuts badged as simplification, the new government should make reforms that actively help manufacturing and encourage investment, innovation and job creation.
“It must also commit to a much more predictable and transparent approach based on working closely with business.”
Osborne has announced that a budget will take place on June 22 and is expected to outline on Monday how the £6bn worth of public spending cuts which formed a key part of the Conservatives election manifesto will be achieved.
The Times newspaper reported today that those cuts could include scrapping the government loans of £270 million to Vauxhall, £20 million to Nissan and £90 million to Sheffield Forgemasters, along with guarantees worth £379 million to Ford.
It appears to have drawn the conclusion based on a comment Osborne made that any spending commitments announced since the beginning of the year would be reviewed but a Treasury source seemingly played down the threat.
“The point of the review is to see things that were wasted and not value for money,” the source said. “In order for us to reconsider they would have to be considered poor value for money. I have not seen it suggested that they were.”