Manufacturers expected little, Chancellor delivered

For manufacturers, this year’s Spring Budget was a quiet affair. Terry Scuoler reads the runes and looks to the Autumn Statement for action to support UK manufacturers.

Terry Scuoler, CEO, EEF
Terry Scuoler, CEO, EEF.

The Chancellor has delivered March’s Budget statement, confirming that it was the last one to be announced in the spring.

Just 68 pages long, the Budget document was barely half the normal size, and while the speech didn’t quite break records for being the shortest (45 minutes if you’re interested) it contained little of specific relevance for industry.

That is probably no bad thing right now. I suspect most businesses would be quite happy to be left in peace, because they already have more than enough on their plate.

As well as the general uncertainty around Brexit, April alone introduced the Apprenticeship Levy, the first stage of Gender Pay reporting and increases in the Living Wage and the National Minimum Wage.

While this Budget may be remembered for the political implications of the (shortlived) changes to national insurance contributions for the self-employed, the Chancellor’s overall approach was pragmatic, given the uncertainties which might lie ahead now Article 50 has been triggered.

The better-than-expected state of the public finances and the smooth running of the economy might have allowed him to spread some jam today, but overall it’s probably better to save fiscal largesse for tomorrow when it may be needed more urgently.

Education

The one eye-catching announcement for manufacturers was the introduction of ‘T-levels’, backed with an extra £500m committed to changes in technical education. This is a welcome first step towards putting technical and academic education on an equal footing.

It ticks all the right boxes, emphasising parity of esteem and the need to radically simplify and streamline the current system of qualifications, which is overly complex and misunderstood by students, teachers and employers.

Make sure your voice is heard

There is an urgent need for manufacturers, particularly small and medium-sized firms, to make their voices heard in the debate over the UK’s developing Industrial Strategy.

There’s a danger that government won’t hear the very genuine concerns and the fresh ideas of SMEs, those business, for example, which are suffering most with skills shortages, in competition with much larger companies and as a result of being in locations away from the main industrial heartlands.

These isolated manufacturers are also the ones in need of infrastructure investment to better connect them with opportunities. SMEs are the lifeblood of UK industry, offering a secure source of high quality components and the breadth of ingenuity to develop new products and services. As such, their voices have to be heard.

Responses should be submitted no later than 11:45pm on 17 April 2017 using the CitizenSpace online consultation platform.

Government must now ensure this is truly new funding for the skills system and that the technical qualifications which result are aligned with the needs of employers of all sizes.

This announcement also showed government sticking with the challenge of raising productivity levels in the UK economy. It will be welcomed by businesses as a much-needed demonstration of cross-government coherence in its approach to industrial strategy priorities.

Business rates

However, the one glaring omission in the Budget was on business rates reform.

While the Chancellor might be pleased by the positive headlines that were generated by action on business rates, manufacturers will be very frustrated that this did not extend to the removal of plant and machinery that could have added further to the overall productivity package.

If the Chancellor is truly serious about addressing the UK’s productivity challenge, then this is an issue that must be addressed.

While this Budget doesn’t have all the answers to our future growth challenges, the evolution of the R&D tax credit, action on digital infrastructure and regional road networks, together with additional investment in technical skills and lifelong learning is a solid foundation on which future strategy can build.

The show now moves on to the ongoing consultation on industrial strategy, where we need to see concrete, pragmatic targets and policies. The Chancellor’s Autumn Statement will take place in a very different economic and political climate to that which he faced this spring, and manufacturers need and expect the full support of the government.