The Autumn Budget may be framed as a Westminster event, but the consequences will be felt on shop floors and across already-stretched supply chains. Manufacturing output has been sliding, order books have thinned, and the cost base for energy-intensive production remains stubbornly high. Many plants are operating with little slack, running lean on both people and capital investment, while waiting to see whether the Chancellor will make it easier or harder to justify the next round of spending.
Manufacturers have heard years of rhetoric about productivity, industrial strategy, and the promise of a “new industrial revolution.” What they see in practice is a pattern of short-term allowances, shifting reliefs, and policy choices that leave British industrial energy among the most expensive in Europe. That combination means the Budget is now a primary risk factor in its own right for many operators.
Industrial leaders are not asking for grand overpromises. They want three things that can be measured easily enough: a path to internationally competitive energy costs, a tax system that rewards long-term investment instead of penalising it, and a skills and delivery regime that can actually support the projects government keeps announcing. Without movement on those fronts, the risk is that another Budget lands on industry as a revenue source, not as the growth engine ministers claim to value.
Energy costs
The first and loudest demand from the sector is to cut structural energy costs. Electricity is the fuel for automation, digitalisation, and any realistic form of low-carbon manufacturing; if it stays expensive, the rest of the growth agenda is theory.
“Productivity starts with power and yet the UK is trying to power a new industrial revolution on prohibitively expensive electricity,” says Ben Peters, co-founder and CEO of infrastructure specialist Cogna. “If the upcoming Budget is serious about productivity, it needs to go beyond slow-burn Industrial Strategy policy and fast-track measures to make industrial energy costs competitive. This is the basic foundation for every other growth policy – AI, automation, and innovation in the critical industries that keep society operational.”
He argues that there is little point talking about AI programmes and digital incentives if factories are struggling with the basics. “Policies like these can’t have a meaningful impact if factories can’t afford to run. If AI is today’s steam engine, it’s not going anywhere without abundant, cheap fuel,” he says, calling for “proper infrastructure investment” and faster planning for power and data infrastructure as preconditions for industrial growth, not afterthoughts.
The structure of the energy bill is the core concern. Non-commodity charges — the network, policy, and levy components — already account for the bulk of many industrial electricity bills and are forecast to rise further as more of the clean-energy transition is pushed onto tariffs. For high-load, continuous operations, those charges turn electricity into a competitiveness problem rather than a decarbonisation opportunity.
For Chris Bowden, CEO and founder of energy supply platform SQE, one obvious step sits directly in the Chancellor’s hands. “Withdrawal of the Carbon Price Support mechanism – the UK’s unilateral carbon tax applied on top of the UK Emissions Trading Scheme (ETS). It no longer serves a meaningful purpose,” he argues.
“Instead, it drives up wholesale electricity prices pushing more households into fuel poverty, undermines the competitiveness of industrial and commercial (I&C) consumers, and increases the risk of carbon leakage as industry offshores. The overall fiscal benefit to HMT is limited, but its removal would send a strong signal that the Government is serious about lowering energy costs and strengthening UK industrial competitiveness.”
From the supply side, Anthony Ainsworth, chief operating officer at npower Business Solutions, points to his company’s Business Energy Tracker 2025, which “found that energy remains the biggest business risk for the fourth year running, continuing to hold back confidence and investment”. He stresses that the most effective move would be to tackle those rising non-commodity costs which already make up the majority of a typical electricity bill and are set to climb further.
These charges, he notes, fund the clean power transition but are increasingly eroding industrial competitiveness and pushing energy-intensive processes to question their UK footprint. For Ainsworth, that means extending schemes such as the British Industrial Competitiveness Scheme (BICS) beyond a narrow band of the most energy-intensive users, or redesigning levies on a sliding scale that reflects both ability to pay and exposure to international competition.
Energy policy is also where climate and competitiveness collide most visibly. Josh Pitman, managing director of sustainable packaging producer Priory Direct, wants the Budget to “do more to support green energy rollouts and showcase how green energy can cost less, something that business should surely be jumping on.” Without that, decarbonisation risks being seen across factory management teams as a byword for higher costs and reduced margins rather than as a route to modernisation and resilience.
Evidently, if the government expects manufacturers to invest in electrification, digitalisation, and low-carbon kit, then the Autumn Budget must start to reverse the trend of ever-rising structural power costs. That means decisions on Carbon Price Support, on the scope and generosity of BICS, and on whether levies are designed to support industrial users or quietly push them towards the exit.
Investment incentives, not trimming reliefs
High energy prices are only part of the puzzle, with another substantial part being whether the tax system rewards or punishes investment in productive capital. Manufacturers are already deferring projects in response to weak order books and uncertainty; further erosion of allowances and reliefs will simply turn tactical delays into long-term under-investment.
Jose Arturo Garza-Reyes, professor of operations management and head of the Centre for Supply Chain Improvement at the University of Derby, believes that “the single most impactful measure in the Autumn Budget that would most strengthen the UK’s industrial competitiveness and investment confidence would be to allow companies operating in the UK to permanently and immediately deduct the full cost of new machinery, equipment, and technology from their taxable profits, rather than spreading the deduction over several years. In other words, making full expensing permanent while also extending it to leased assets.”
In his view, that combination would give companies long-term certainty, support the digitalisation of manufacturing and supply chains, and put the UK closer to international competitors that already use such incentives to anchor industrial investment.
A large share of modern production equipment, automation systems, and advanced manufacturing technology is leased rather than purchased outright. Full expensing that ignores leased assets therefore misses a significant proportion of real-world investment. Extending the regime would align the tax treatment with the way factories actually finance their upgrades.
Other commentators agree and are quick to connect financial incentives for industrial investments with enhanced innovation, productivity and outputs. “If the UK truly wants to compete on an industrial level, the Autumn Budget must prioritise incentivising investment in advanced manufacturing and automation not through grand gestures, but through targeted fiscal measures that help businesses industrialise faster,” says Dan Pollard, production director at Thurston Group.
“We need a clear and sustained capital allowance framework that rewards productivity investment, robotics, digital infrastructure, and factory modernisation, rather than punishing it through short-term tax cycles. Too many manufacturers are holding back because the goalposts keep moving. Long-term consistency in incentives will unlock private investment, innovation, and global competitiveness.”
Successive Budgets have done exactly the opposite, using allowances as short-term levers and constantly rewriting the rules. Temporary “super-deductions” and time-limited uplifts may play well on Budget day, but they create a stop-start pattern that is difficult to reconcile with multi-year plant modernisation programmes. Pre-Budget speculation about further freezes to thresholds and trims to reliefs has not gone unnoticed on factory boards.
For SMEs embedded in industrial supply chains, the situation is even more acute. “Company insolvencies are rising and business leaders are struggling. SMEs in particular, which make up the majority of the market, do not have the broad shoulders that the government has been seeking to hang its previous budget from,” says Pitman. He argues that there needs to be a more honest conversation about where the tax burden sits.
“Whilst it may be an unpopular position for a Labour government, I think it’s clear that we need to tax people,” he says, adding that it is up to government “to demonstrate what they can achieve with taxpayer’s money to build pride and acceptance in the state. We all want a better country but we have to be willing to pay for it.”
If more revenue is genuinely unavoidable, it should not be found through salami-slicing the reliefs that support productive capital investment, nor by leaning again on employers’ National Insurance, business rates, and sector-specific levies. The Budget will show whether the Treasury understands the difference between taxing wealth and taxing the assets that keep factories running.
Skills, delivery, and the credibility of “industrial strategy”
The third request from industry is the least glamorous, but without it very little of the rest will happen at scale. Industrial strategy, digitalisation, Net Zero — all of it runs into the same bottleneck if there are not enough skilled people to plan, build, operate, and maintain the assets.
Pollard is direct in declaring that tax incentives on their own are not sufficient. In many plants, the constraint is not just capital cost, but the availability of engineers, technicians, and operators with the right mix of digital and mechanical capability. “The transition to industrialised, data-led manufacturing demands a workforce that can program, analyse, and problem-solve, not just build,” he says. “A refreshed apprenticeship and reskilling strategy, aligned with modern manufacturing needs, would do more for UK industry than any one-off subsidy ever could.”
That chimes with years of data showing a fall in engineering and manufacturing apprenticeship starts despite repeated promises to fix the system. The re-badged Growth & Skills Levy continues to tie up significant funds that manufacturers would like to deploy more flexibly for shorter courses and mid-career reskilling. The Autumn Budget offers an obvious chance either to unlock that capital or to signal that skills will remain an afterthought.
Robbie Blackhurst, founder of Black Capital Group and a long-time advocate of better project delivery in the built environment, sees skills and procurement as two sides of the same coin. “The UK’s industrial sector urgently needs a sustained commitment to workforce development and skills investment,” he argues. “A single, high-impact measure the Chancellor could take would be to expand and secure long-term funding for apprenticeships and technical training programmes, particularly in construction, engineering, and advanced manufacturing. The skills shortage remains a major barrier to productivity and investment; businesses often hesitate to commit to expansion or innovation when they cannot access the talent they need.”
Blackhurst also highlights the way the state buys projects. Early contractor involvement in public schemes, he says, has repeatedly been shown to improve build quality, reduce lead times, and cut unnecessary costs by tackling risks and design challenges early. Standardising that approach across major programmes would, in his view, deliver better outcomes and “offer far greater value for the taxpayer – something the UK industrial sector would strongly welcome.” It would also give manufacturers a more predictable pipeline of work linked to real engineering and construction output rather than sporadic, stop-start commissioning.
Without a credible skills and delivery plan, the rest of the industrial rhetoric in the Budget amounts to little. Factories cannot adopt new technology, raise productivity, or deliver large-scale decarbonisation projects if they do not have the people to do the work and the project models to bring them in early enough.
A test of whether government really values industry
The Autumn Budget will not resolve every structural problem facing UK manufacturing, but it will make some very clear choices. On energy, the Chancellor can decide whether to keep leaning on electricity bills to fund the energy transition or to begin shifting the burden away from industrial users by scrapping outdated carbon charges and widening support schemes like BICS. On investment, she can either lock in permanent, comprehensive full expensing – including for leased assets – and stabilise capital allowances, or continue to treat industrial reliefs as a convenient trimming exercise whenever the numbers do not quite add up. On skills and delivery, she can leave levy money tied up and public procurement unchanged, or she can back apprenticeships, technical training, and early contractor involvement as core parts of industrial policy rather than adjuncts.
Dan Pollard sketches a version of success in which those decisions pull in the same direction. If government can “align fiscal policy, training incentives, and industrial strategy under one banner, focused on digital transformation, productivity, and sustainability,” he argues, the UK has “a real chance to rebuild Britain’s reputation as a world-class manufacturing nation.”
That is the scale of what is at stake: not a marginal tweak to tax bills, but a signal about whether making things in Britain is still seen as a strategic asset or merely a line item in the fiscal spreadsheets.
Manufacturers have spelled out plainly what they need from this Budget in unusually direct terms. On 26 November, they will find out whether those priorities finally make it off the speech notes and into the numbers – or whether industry is once again the easiest place for the Treasury to balance its books.
