Manufacturers give their reaction to the latest Budget announcement

Posted on 6 Mar 2024 by The Manufacturer

In today's budget, the last before the expected General Election later this year, the Chancellor Jeremy Hunt outlined further commitment to the manufacturing sector, including an investment of £360m in manufacturing and R&D. The funding will go into British manufacturing and research and development (R&D), following the launch of the Advanced Manufacturing Plan in November last year.

Addressing Parliament ahead of the Budget announcement Hunt said: “We are sticking with our plan by backing the industries of the future with millions of pounds of investment to make the UK a world leader in manufacturing, securing the highly skilled jobs of the future and delivering the long-term change our country needs to deliver a brighter future for Britain.”

He was also quick to point out that UK growth has been higher than every large European economy in recent years. Presenting the Budget, the Chancellor said the Office for Budget Responsibility (OBR) now predicts the economy will grow by 0.8% this year, up from its previous prediction of 0.7%.

Commenting on the Budget announcement, Stephen Phipson, Chief Executive of Make UK, said: “Industry will welcome this statement which builds on a number of other key announcements in recent months. The Chancellor clearly sees manufacturing as a key sector in the economy of the future and is slowly, but surely, putting in place the building blocks of an industrial strategy.

“The extension of full expensing to leased assets will benefit smaller companies in particular and, we would urge draft legislation to be brought forward as soon as possible so that this measure can be made permanent at the earliest opportunity.”

On the consultation on leasing, Fhaheen Khan, Senior Economist at Make UK, added: “Making full expensing permanent was one of the single most supportive changes to the treatment of capital expenditure for UK businesses in the last decade. Manufacturers are one of the biggest users of capital allowances and, widening access to leased assets highlights the government’s commitment to explore new ways to ensure the UK is an attractive location to invest.

“Extending full expensing to leased assets will especially support smaller manufacturers while, further down the line, the government should explore whether it can be expanded even further to support sustainability goals by covering refurbished, second-hand technologies.”

On the extension of the Recovery Loan scheme, Faye Skelton, Head of Policy at Make UK, said: “By extending the scheme, the Chancellor has extended a welcome olive branch to small businesses in the UK in an act that recognises their strategic importance to the economy.

“Smaller manufacturing businesses account for the vast majority of the UK manufacturing base  and this will provide them with a vital safety net to ensure their long-term viability.”

Mike Hawes, SMMT Chief Executive, said: “Government has been keen to assure the UK automotive industry’s competitiveness, with support for EV development and manufacturing – including £2.1 billion in autumn’s Advanced Manufacturing Plan – but there is little to help consumer demand. Today’s Budget is, therefore, a missed opportunity to deliver fairer tax for a fair transition. Reducing VAT on new EVs, revising vehicle taxation to promote rather than punish going electric, and an end to the VAT ‘pavement penalty’ on public charging would have energised the market. With both Government and industry having statutory requirements to deliver net zero, more still needs to be done to help consumers make the switch.”

Professor Sir Jim McDonald GBE FREng FRSE, President of the Royal Academy of Engineering, said: “The government’s announced investment to accelerate late-stage R&D and support engineering and manufacturing projects across life sciences, automotive and aerospace sectors is welcome, as many of these technologies are pivotal for delivering healthcare and achieving the UK’s net zero and growth ambitions. The Green Future Fellowships delivered by the Academy will also be vital for achieving these ambitions and driving economic growth. The government’s ongoing investment in aerospace through the Aerospace Growth Partnership, the Aerospace Technology Initiative and Advanced Propulsion Centre has been successful for its long-term commitment beyond budget and political cycles, an approach that needs to be replicated across the research and innovation sectors.

“To maintain the UK’s place as a leading tech ecosystem, it’s important that the government move swiftly to implement the Mansion House reforms to support innovative companies to access the capital they need to scaleup domestically and we encourage the government to explore other sources of investment held in UK financial institutions.

“Continued investment in the UK’s AI sector, including through the Alan Turing Institute, is vital to support the development of emerging technologies and engineering that can help to address complex societal challenges. However, it’s crucial that this continued investment is delivered in a way that unlocks opportunities for innovation, skills development and economic success in all nations and regions across the UK, to ensure that advancements in AI engineering contribute to a more inclusive economy.”

Marco Forgione, Director General at the Institute of Export and International Trade, said: “Our members welcome the increase in the VAT threshold from £85,000 to £90,000 announced by the Chancellor today but we have been pressing for the threshold to be set at £100,000 after it’s been frozen for more than 7 years.

“Small businesses are the lifeblood of our economy, and getting more of them trading internationally is essential to sparking growth in the UK economy. In UK only about 5% of MSMEs trade internationally in other major economies it’s much higher, in Germany more than 90% of MSMEs trade cross-borders.

“The Chancellor quite rightly talked about encouraging more working aged people into work, tapping into the UK’s talent pool, but there was nothing about helping get the skills businesses need. We called for action to help MSMEs access the Apprenticeship levy and employ apprentices but there’s was a gap in addressing the wider skills agenda. News of additional support for Minister Ghani and the critical supply chain work is to be welcomed and will help build UK resilience. There is more to do though on the UK’s wider import strategy which has to form part of the UK long term plan for business growth.

“The confirmation that the fuel duty freeze and 5p cut are positive and will help tackle inflation, particularly for the UK’s essential haulage and logistics sector.”

John Pearce, CEO of Made in Britain, the trade association uniting 2,000 British manufacturers commented: “Our skilled workforces are the backbone of the UK manufacturing sector, so at Made In Britain we support the Chancellor’s decision to reduce the tax burden on British workers via the second reduction in National Insurance in a year. At the same time, inflation and the cost-of-living crisis have produced wage pressures that affect the competitiveness of UK businesses across the economy. As such, we welcome any effective measures to bring, and keep, inflation within the government’s target and it is very welcome that the OBR forecasts that this is being achieved.

“Devolved Powers for Business Growth in regions is also to be welcomed – because manufacturing is all over the country and supports high quality employment with meaningful work that can help raise the esteem of business communities all over the UK. Across the manufacturing sector, members of Made in Britain are looking to the government to deliver a competitive, efficient market through light touch regulation that supports the sector’s growth and eases barriers to export trade.”

Rowan Crozier, CEO of Brandauer, a Birmingham-based metal pressings and tooling specialist: “For a company that has invested more than £2m in the last eighteen months, we are in favour of any incentives that make those commercial decisions easier. Full expensing is definitely one of those and I’d love to see draft legislation on extending it to leased assets passed quickly.

“This, combined with falling inflation, creates a more welcoming climate to direct company cash into people and new technologies.

“I was a bit disappointed to see a complete lack of focus on supporting companies who export in the post-Brexit world. Thousands of us are defying more bureaucracy, complex tariffs, and unequal playing fields to fly the flag for UK manufacturing and bring GDP back into this country.

“It would have been nice to see some additional support or financial incentive introduced to make international trade more accessible.

“I will always bang the drum for this illusive Industrial Strategy. I wasn’t expecting it to be included in this budget, but the government, regardless of party, must find a way of creating a strategy that is locked in place for 25 years and transcends all political bias.”


Beatrice Barleon, Head of Policy & Public Affairs at EngineeringUK added: “We welcome the government’s commitment to invest in crucial sectors, such as engineering and technology, and small to medium sized enterprises in the UK, including for example, the Green Industries Growth Accelerator (GIGA). We also share the pride that the Chancellor clearly felt when talking about how the UK is becoming a leading force in the technology sector, comparing it to the Silicon Valley.

“However, given all this, we are extremely disappointed that there is no mention of the need to invest more and focus on skilling the future workforce. Without more skilled young people coming through the UK education system, UK businesses will struggle to grow and stay competitive compared to other countries.

“There is an acute STEM teacher shortage affecting young people’s STEM education and therefore their ability to pursue careers in these vital sectors, yet there was no mention of teachers and how the government intends to support them. There was also a lack of focus on how crucial training routes, such as apprenticeships, will be enabled to grow into the future, and how this will be funded.

“We renew our ongoing call for the government to develop a clear and properly funded STEM skills plan. This should include investment in careers outreach and education, apprenticeships for young people aged 16-19 and commitment to sustaining existing funding levels for STEM teacher professional development.”

Aerospace and automotive

Among other announcements in the Budget it was revealed that, in a strategic move to fortify the UK’s aerospace sector, the Chancellor’s budget also earmarked nearly £200m for joint government and industry funding into aerospace R&D projects.

The spotlight of this funding is on pioneering initiatives, including a £40m injection into a Marshall ADG led project focused on developing zero carbon aircraft engine technology. Furthermore, approximately £96m is set to fuel Airbus-led projects, marking a significant leap forward in sustainable aviation solutions.

Simon Weston, Group Managing Director of ASG Group, expressed enthusiasm for the sector’s growth. He stated: “This injection of funds aligns perfectly with ASG Group’s commitment to innovation and sustainability in aerospace. We are poised to leverage these investments to drive groundbreaking advancements in our industry.”

Managing Director of ASG Arrowsmith in Coventry, Jason Aldridge, applauded the collaborative nature of these initiatives. He added: “The joint government and industry funding creates a powerful synergy. It enables us to pool resources and expertise, fostering a collaborative environment that accelerates technological breakthroughs.”

ASG Group’s commitment to excellence and innovation in the aerospace sector is evident in its strategic positioning. Managing Director of ASG Produmax in Baildon, West Yorkshire, Jeremy Ridyard, highlighted: “The funding channelled through the Aerospace Technology Institute (ATI) programme provides a solid framework for pushing the boundaries of aerospace technology. ASG Group is well-positioned to play a pivotal role in these groundbreaking projects.”

As the aerospace industry continues to evolve, ASG Group stands poised to lead the charge, leveraging these investments to drive innovation and sustainable solutions for the future of aviation.

The Budget has profound implications for the automotive and aerospace sectors. The government’s commitment to advancing technology is evident, with a notable £73m in combined government and industry investment earmarked for automotive R&D projects.

Shaun Rowley, Managing Director of ANT Industries commented: “The aerospace sector is at a critical juncture, and the funding infusion will drive advancements in sustainable aviation. Projects like the zero carbon aircraft engine are emblematic of our collective commitment to reducing the environmental impact of air travel and fit perfectly within our 30 years of experience in the sector manufacturing components for aero engines and gas turbine engines.

“In addition, the government’s focus on electric vehicle technology is a pivotal step in shaping the future of mobility. The £36m government funding through Advanced Propulsion Centre UK competitions underscores a strategic push toward sustainable transportation solutions.”

This investment is not only aimed at fostering incremental advancements but propelling the development of the next generation of battery electric vehicles. Four projects, backed by the £36m government support, are at the forefront of pioneering technologies that promise to redefine the electric vehicle landscape.

The automotive and aerospace industries find themselves on the cusp of transformative change. With government support fostering innovation, the trajectory of these sectors appears poised for a revolutionary shift towards sustainability and cutting-edge technology.

Professor Derrick Holliday, Centre Lead, Driving the Electric Revolution Centres (DER-IC) North East said: “This investment in British manufacturing and research and development is positive news for the industry and will help to connect the UK research and development (R&D) landscape with the UK manufacturing sector.

“The UK is a global leader in engineering innovation. Investments such as this support UK industry to capitalise on these strengths and anchor high value engineering in the UK. A strong industrial strategy will support the UK to compete with competitor markets in Europe, America, and Asia.”

Food and Beverage

Following the announcement on alcohol duty, Ed Baker, Managing Director at Kingsland Drinks, commented: “The Chancellor’s decision to freeze alcohol duty in today’s Budget is welcome, and it will help to ease one of inflationary pressures that penalise the drinks industry. We are encouraged that the government has listened to a very united industry in recent weeks and acted accordingly.

“While this step will ease pressure in the short-term, we urge the government to tune into the reality facing all parts of the drinks industry and continue to listen. It’s critical we all work to preserve the buoyancy of our innovative and hard working sector that employs thousands of people nationwide – and brings in much needed revenue to the treasury.

“We also stand united with the WSTA in our frustration at the Chancellor’s decision to scrap the easement for wine duty, which will lead to costly red tape, added complexity and price uncertainty for consumers.  We urge the government to see sense and listen to the industry on this critical matter.”

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