Manufacturers of the UK will be forgiven for watching Wednesday’s Autumn Budget announcement with more than a slight sense of trepidation and anxiety. The sector is anticipating further tax increases as Chancellor Rachel Reeves has warned of “necessary choices” in the build up to her announcement this week.
Industry leaders have warned that without decisive support on tax and energy, the sector faces escalating cost pressures that threaten investment and even long-term viability. A recent survey of SME manufacturers by Paragon Bank revealed that 78% are still reeling from last year’s rise in employer National Insurance Contributions. And nearly half are calling for immediate reforms to business taxation, rates, innovation incentives, and skills training.
Make UK HAS echoed those concerns, listing its “six key asks” of the Budget, which include expanding the British Industrial Competitiveness Scheme (BICS), locking in full expensing for leased machinery, and protecting firms from further NIC hikes. Here we look at the key wants and needs of the sector ahead of Wednesday’s announcement.
Stephen Phipson, CEO of Make UK, said: “Business is facing a potent combination of weak demand at home and abroad, as well as escalating costs across the board. If we are to get growth of the floor then it is going to be business that provides it and this budget simply has to have growth as the number one focus.
“In particular, energy costs are now an existential threat to deindustrialising the UK and we need to get them down as a matter of urgency. Government needs to stop sitting on its hands on the energy support scheme and continually kicking the can down the road hoping the problem will resolve itself. The scheme needs to be brought forward and backdated to when it was first announced.”
According to new data released by Make UK, almost three quarters (70%) of companies are bracing themselves for tax increases, while more than two thirds (68%) said their costs have already risen more than expected in the last six months forcing more than half (58%) to raise their prices. Almost a similar number (53%) intend to raise their prices in the next six months.
Furthermore, more than nine in ten companies say the increase in NICs has impacted their business in the form of reductions in pay increases (54%) and pay freezes (29%). Half of companies (51%) have frozen recruitment.
Looking forward, 95% of companies are concerned about the Employment Rights Bill while over two thirds of companies (67%) say it will negatively impact their business. Furthermore, Make UK warned that little progress has yet been made in reversing the 41% decline in engineering and manufacturing apprenticeship starts since 2017. While there are welcome steps towards a more flexible Growth and Skills Levy, the removal of levy funding from most level 7 apprenticeships risks valuable apprenticeship training becoming unavailable to companies.
Make UK is calling for six key measures to be announced in the Budget:
- An expansion of the BICS to all manufacturers which must be backdated to June 2025
- A ringfencing of the £1.1bn raised from the Growth & Skills Levy for investment in the skills system
- A targeted exemption from business rates for investments in green technologies
- A commitment to no further increases in NICs
- A targeted electrification discount for companies switching from natural gas or oil to electricity
- Expansion of Full Expensing to include leasing
Kevin Craven, CEO, ADS Group: “It’s hard to miss the Budget chatter dominating the headlines and our social media feeds this week. Will taxes rise? What about pensions? All valid questions no doubt – but the one that keeps circling in my mind is this: will our sectors be rightly recognised as the engines of economic growth?
“There’s no doubt that we are in a very different position compared to the Chancellor’s last statement and (thankfully!) the landscape has shifted. We’ve seen the Industrial Strategy published, rightly acknowledging the strategic importance of our four sectors. There’s been a long-term funding commitment to the Aerospace Technology Institute, some clarity on defence spending targets of 3% and 3.5% of GDP, enhanced support for the British Business Bank, and steps to help SMEs cut energy bills and meet future skills needs. There’s been a long-term funding commitment to the Aerospace Technology Institute, some clarity on defence spending targets of 3% and 3.5% of GDP (intent is not the same as commitment), enhanced support from the British Business Bank, and steps to help SMEs cut energy bills and meet future skills needs.
“These moves are substantial. However, the Autumn Budget is the point to move forwards with delivery, without a repeat of last year’s unexpected and deeply harmful tax on employment. That measure added an estimated £1,000 per full-time employee across our sectors. Another hit of that scale could be the difference between keeping the lights on this winter. Industry cannot absorb a blow like that again, and I’ve made this point unequivocally clear in discussions with senior political stakeholders this week.
“Our recommendations are clear. The government must provide certainty on its business taxation and defence spending plans; strengthen its support for innovation and sustainability; and decisively move forwards with its plans on skills policy. It must also leverage the opportunities of dual-use technologies; drive technology adoption for productivity gains; modernise our digital customs regime; and ensure that it maintains the momentum against the backdrop of testing geopolitical challenges. This is a roadmap to delivering growth and I’d encourage you to read more on our member’s page.
“While I certainly don’t envy the Chancellor’s job, there’s no sugar coating the truth that the weight of our sectors – industries that already deliver £42bn of value to the economy – hangs on her decision. Until then, we’ll continue engaging with government in the days ahead – with bated breath – to navigate the opportunities and challenges that lie before us.”
Rob Flello, Chief Executive, Ceramics UK: “There has been much speculation over the last few years about switching levies from electricity to gas. While there may be some benefits to this for our industry in terms of reduced electricity bills, unless there is a total upfront exemption it risks destroying the UK ceramic industry overnight.
“Ninety per cent of the UK ceramic industry gets no relief under the ‘Supercharger scheme’ from the punitive levies added to the industry’s electricity bills, accounting for around 60% of those costs. At no cost to the Government, it could make a small change in the scheme’s rules that would bring the industry into the relief scheme.
“Government uses the very big stick of the UK Emissions Trading Scheme to force industry to decarbonise its activities. That stick is getting bigger as free allowances are restricted. Imports from high-carbon countries face no such ‘carbon tax’. In the UK this makes our manufacturers uncompetitive both domestically and in global markets. The big stick approach is also fundamentally flawed because there is either no technological answer to enable decarbonisation or it is reliant on Government action on electricity costs, grid infrastructure, hydrogen availability, or the cost of changing kilns, etc.
“On landfill tax, the government’s proposals will be counter-productive and lead to less income from this tax. Measures need to be introduced to ensure long-standing quarry operators are not penalised by a new regime.
“The proposed changes to business rates aimed to help the high street will do great damage to factories such as manufacturers. Government would do better to specifically target those out-of-town retail and distribution hubs that it sees as ‘the problem’ and not use a broad-brush approach. Overall, Ceramics UK wants the government to start supporting the sector instead of forcing it offshore. We also need to see engagement with industry about the likely impact of proposed policies such as landfill tax instead of trying to push through policies that will harm growth.”
Glenn Aston, CFO and Jaz Khunkun, CCO, Rowan Precision: As the Chancellor prepares to deliver her Budget this week, UK manufacturers find themselves in a familiar position: hopeful, but wary. The sector has been promised a renaissance many times; what it needs now is policy that matches the ambition of the companies still investing, innovating and exporting despite global volatility.
Few firms encapsulate this blend of resilience and forward momentum better than Rowan Precision, the Birmingham-based CNC machining specialist celebrating 40 years of high-tolerance engineering. Freshly acquired in full by OSYS Rowan Limited, the company is entering a new chapter under the stewardship of CFO Glenn Aston and CCO Jaz Khunkun — both long-time advocates for a strong, modern, globally competitive British manufacturing base.
From the boardroom in Birmingham, the message from Rowan Precision’s leadership is unequivocal: this Budget will be a litmus test of whether the government genuinely understands what manufacturers need to thrive.
“Manufacturers can adapt to almost anything except uncertainty,” said Glenn, a veteran CFO with more than three decades in UK industrials. “We invest in machines that have working lives of a decade or more. You can’t plan that kind of capital cycle if the tax environment shifts every 12 months.”
Aston points to previous periods where capital allowances, R&D tax credits and digital-adoption incentives have been revised, redefined, or scrapped altogether. Each change forces boardrooms to hit pause, reassess, and often re-sequence investments.
“For precision engineering firms like ours, stability is crucial,” he added. “It’s the foundation of productivity. If the Chancellor wants manufacturers to invest, then give us a policy framework that lasts longer than the machine-tool warranty.”
Rowan Precision is known for its advanced machining capability: sliding-head 13-axis CNC turning, multi-axis fixed-head mill-turn centres, and five-axis machining cells capable of delivering complex geometries in a single operation. But keeping that capability world-class requires relentless investment.
“Advanced manufacturing is literally what we do every day,” said Chief Commercial Officer Jaz. “Customers in aerospace, defence and high-performance engineering demand tolerances that leave zero room for error. If the UK wants to lead in these sectors, government policy must support the adoption of high-precision technology, automation and digital quality systems.”
Jaz, who has championed manufacturing competitiveness throughout his career, argues that the Budget is a critical lever — beyond local manufacturing, for the entire national supply chain.
“Give companies confidence to invest in robotics, metrology, digital twins, multi-axis machining — the capabilities that keep work in Britain rather than seeing it migrate overseas,” he said. “If we want to strengthen the UK’s industrial backbone, we must reward ambition.”
While the industry celebrates innovation, no amount of cutting-edge equipment can fully offset the reality of cost inflation. Energy, labour and raw materials remain stubbornly high — and brutally unforgiving for precision manufacturers operating on tight margins.
“We’re not asking for handouts,” Glenn stressed. “But energy pricing for industrial users has to be competitive with European peers, or we’ll always be running uphill. The same goes for employer taxes. The Budget needs to recognise that manufacturing is capital-intensive and strategically important.”
He noted that manufacturers want to invest, expand, and hire — “though we can only do that if the economics make sense.”
Khunkun is equally direct about the need for the Budget to acknowledge the UK’s regional manufacturing clusters — particularly in the Midlands.
“The Midlands built Britain’s manufacturing reputation. Companies like ours keep that heritage alive,” he said. “But we shouldn’t have to fight harder than other regions just to remain competitive.”
He argued for targeted investment in skills, apprenticeships, and engineering careers, alongside support for export-focused SMEs.
“If the Chancellor wants growth, then back the regions where manufacturing excellence already exists. We just need the investment to scale.”
After undergoing acquisition last year, Rowan Precision enters its fifth decade with renewed ambition. The acquisition by OSYS Rowan has fortified the company’s long-term growth plans and injected new strategic focus.
But both emphasised that the future of UK manufacturing cannot rely solely on company-level commitment.
“This Budget is an opportunity for the government to demonstrate that it sees manufacturing as part of Britain’s future, not its past,” Glenn said. “Give us a stable foundation, reward investment, support skills, and make energy competitive — and UK manufacturers will do the rest.”
Jaz sumed it up more bluntly: “The sector fears neglect. If the Chancellor gets this right, British industry will respond with jobs, exports and innovation. If she gets it wrong, the cost will be felt for a decade.”
For Rowan Precision, the stakes are clear. Precision manufacturing requires precision policy — not vague ambition. With world-class capability and new leadership at the helm, the company stands ready to invest, innovate and grow.
Kelly Becker, President, UK, Ireland, Belgium and The Netherlands, at Schneider Electric: “The UK has a real opportunity to reap the rewards of the green economy, stimulating growth, driving innovation, and creating thousands of skilled jobs for the future. Government support is crucial to make this shift to a more competitive UK economy and promote a just energy transition.
“It is critical that government delivers key policy pledges outlined in the Industrial Strategy, such as lowering energy bills for businesses and enabling a pro-growth regulatory framework. The consultation on the British Industrial Competitiveness Scheme, aiming to cut manufacturers’ electricity bills by up to 25%, is a positive move. This will give firms breathing space to review their current energy consumption needs. Key to this will be the adoption of readily available digital tools that can improve energy efficiency, reduce costs and enhance competitiveness. We also encourage more targeted support for sustainable investments, continued acceleration of grid modernisation, and the green and digital upskilling of the UK workforce.
“Schneider Electric looks forward to these commitments and clarity this week and will continue to remain focused on advancing the energy transition – electrifying, automating, and digitalising UK industry, driving efficiency and sustainability for all.”
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