Industry calls for infrastructure and innovation boost

Posted on 17 Nov 2014 by Callum Bentley

Britain’s manufacturers are calling for a massive boost to infrastructure and innovation in the forthcoming Autumn Statement to build on the strong economic recovery and, lay foundations for longer-term economic growth.

The call was made by EEF, the manufacturers’ organisation in its submission to the Autumn Statement published today. In the submission, EEF focuses heavily on areas for supply side reform which will influence current and future investment plans by manufacturers, as well as the need to maintain a strongly competitive and stable business tax regime.

Commenting, EEF Chief Executive, Terry Scuoler, said: “We have seen a significant turnaround in the economy over the last year, and it is important for the Government to maintain its focus on areas which drive growth, including maintaining a competitive tax regime and other measures which support high value investment and innovation. Despite the forthcoming election Government must continue to drive forward with policies which support long term growth and the re-balancing of our economy.

“Manufacturers are also heavily reliant on road networks. Implementation of those projects left on the too difficult list for too long is an urgent priority.

“In addition, Government has created a network of innovation centres which bring industry and universities together as a seed-bed for new ideas and business opportunities. Amid the many funding pressures Ministers face I hope that support for the existing Catapult centres will therefore be enhanced to make sure they stay at the cutting edge of technology and keep Britain at the forefront of manufacturing excellence.

EEF’s submission focuses heavily on the need to make further progress on existing areas of reform which can influence manufacturers’ current and future investment plans, in particular infrastructure and innovation, together with skills funding.

1.      Infrastructure

According to an EEF survey a third of companies believe the road network to be ‘poor’ or ‘very poor’ while two thirds believe investment in the strategic road network should be governments main priority.

In response EEF is calling for government to set out implementation plans for projects currently at the scoping stage, including upgrades to the A303, A14, A590 and A1. Government should also set out a timetable for tackling the rapidly escalating £12bn local road maintenance backlog and reform of the Highways Agency to guarantee the promised three-fold increase in road investment.

2.      Innovation

According to EEF, support for innovation in the UK has long been underfunded (supporting data of BERD and SME engagement), a situation which must be addressed with international competition intensifying.

While the increase in Innovate UK’s budget in the Spending Review was welcome it still does not match that of overseas competitors. Funding for the Catapult network, a programme strongly supported by manufacturers, should be increased. The funding should be directed at the existing seven centres rather than used to extend the network. This would enable them to build capacity and engage more with SMEs, a critical factor if they are to succeed.

3.      Energy Intensive Industries compensation package

The cost and security of supply of Energy remains an issue for Industry, especially high energy users. The Energy Intensive Industry (EII) compensation scheme announced at Budget 2014 should, subject to state aid approval, be brought forward as early as possible to ensure that EIIs are not exposed to these costs any longer than absolutely necessary.

In addition, EEF is also making the following recommendations:

·        Commit to maintaining the fundamental structure of the business rates system which provides stability and certainty for manufacturers, but introduce more frequent updates to plant and machinery orders, link uprating to an annual average CPI rate and extend empty property relief for industry buildings to 12 months.

·        Consultation should begin now on developing a stable and internationally competitive capital allowances regime when the temporary increase in the Annual Investment Allowance expires in 2016. This should also consider the future of Enhanced Capital Allowances.

·        There should be no future increases to the Landfill Tax Escalator until there is better evidence of the likely impact of any further rises.