Manufacturing reactions to yesterday’s Budget recognised commitment to support industry in a fiscally strained climate but branded the Chancellor as “timid” in the run up to an election.
“The Budget was politically savvy if economically boring.”
This was the summary of Andrew Churchill, MD of Market Bosworth-based SME manufacturer JJ Churchill, in response to the Chancellor’s 2013 Budget announcement yesterday.
Other industry representatives agreed. Many applauded the announcement earlier this week that £2bn will be invested for growth in UK aerospace but it was also felt that although the Budget showed a real commitment to industry, that commitment was still not founded on a real understanding of business needs or how to spend in order to stimulate growth.
Peter Marchbank, CEO of Bristol-based precision measuring specialists Third Dimension said: “The Government has a vision for manufacturing, but without action from the Chancellor, this is just dreaming. And there was little action in the Budget.”
The most commonly welcome Budget measure was the rise in above the line R&D tax breaks to 10%.
Tim Ryan, MD of technology specialist Epigem in Redcar said: “We welcome incentives through the tax system for UK companies to protect their IP, develop their IP and secure their freedom to manufacture. Initiatives like R&D tax relief and Patent Box are fantastic in making the whole patenting process more affordable and manufacturing more profitable.”
Diarmuid MacDougall, heads of the Patent Box and R&D teams at professional services firm PwC agreed, saying that the Chancellor’s actions will be particularly beneficial to technology sectors such as automotive, life sciences and aerospace.
Job half done
While the Budget was largely hailed as a step in the right direction, Terry Scuoler, CEO of manufacturing trade body EEF, labelled it as “a job half done”.
Jonathan Duck, CEO of flooring manufacturer Amtico International backed this view. “The Budget was a step in the right direction but it was timid. I suspect this is because Osborne is boxed-in by concerns over the upcoming election.”
Duck said election priorities were most evident in the announcement of the Help to Buy scheme which “stokes demand but does not stimulate supply and is on a hiding to nowhere as far as growth is concerned.”
Other industry responses expressed a feeling that more could have been done, even with limited spending ability, to stimulate growth.
Juergen Maier, managing director of Siemens Industry UK, said he had hoped that more government underspend would be redirected into infrastructure investment. “The Chancellor’s account of our infrastructure was seen through rose tinted spectacles and actually much more is needed to support energy and transport,” he commented.
Michael Last, MD of Portsmouth-based Formpalex, which has just opened a new 47,000 sq ft factory also felt that “The Chancellor has missed a trick in [failing to increase] capital allowances. Allowing companies to write off against tax 100% of its capital expenditure in the year the expenditure occurs would be a real and simple way to support British industry at such a critical time.”
Overall the Budget delivered on predicted actions and Mr Duck, who called for a “boring Budget” before the Chancellor’s speech said “it certainly delivered the on the boring but steady approach.”
The surprise announcement of an Employment Allowance which will reduce employer National Insurance contribution by £2000 caused an excited stir among some small companies but Mr Duck, who employs around 300 in the UK and 600 globally, said the action is “irrelevant” for larger firms.
“The fact that this announcement was the centre piece, the flourish, in this Budget speaks volumes for the frugal climate and the fact that there is very little money to play with,” continued Duck.
Looking to inspire a feeling of momentum following the Budget, EEF called for helpful measures on business taxation to be built upon in the forthcoming spending review.
Mr Scuoler said: “With the Chancellor sticking to his fiscal plans, [the spending review] can’t just be about tighter spending controls. It must also be about a more radical of shift of spending towards growth.”
The Chancellor did provide some scope for more substantial changes in the future confirming in during the Budget speech his acceptance of recommendations of former deputy prime minister Michael Heseltine, made in his report titled No Stone Unturned.
Originally published last November, the report advocates the devolving of powers and funding to the regions through the Local Enterprise Partnerships.