Budget hailed for boosting manufacturing investment confidence

Make UK has welcomed the indication of a clear path to growth for manufacturing in Chancellor Rachel Reeves’ first Budget, but warns that the increase in employer’s national insurance along with other cumulative rises in employment costs could cost jobs.

Measures to back support for investment and innovation however are welcomed for placing R&D at the ‘centre of propelling UK industry forward’ and will encourage businesses to proceed with productivity enhancing projects with greater confidence.

Stephen Phipson, Chief Executive of Make UK, said: “This budget was always going to involve tough choices for business as the Chancellor grapples with the state of the nation’s finances whilst, at the same time, improving the foundations of the economy. However, there is no escaping the fact that raising Employer National Insurance contributions and, the surprising change in thresholds, at a time of other cumulative increases in employment costs will be challenging for many businesses and especially SMEs.”

Mr Phipson added that looking at the bigger picture and the medium to long-term, Make UK welcomed the Governments clear path to growth for manufacturing with a number of positive measures. “In particular, the commitment to an Industrial Strategy, the Corporate Tax Road Map and, continued support for vital programmes such as Made Smarter, are key elements of a growth plan which will enable UK manufacturing to make significant progress over the coming years,” he said.

On Industrial Strategy, Mr Phipson, said: “The UK has long been an outlier in not having a industrial strategy at the heart of its economy. There can be no doubt that advanced manufacturing now has a critical part to play in driving growth across all regions of the UK. The commitment to a long-term industrial strategy by this government is to be celebrated. It will deliver growth, investment and high-quality jobs.

“After the announcement of the Industry Strategy Council, Government now needs to move at pace to formalise the creation of the individual sector groups so that the formal strategy and more detailed plans can be brought forward.”

Verity Davidge, Make UK Director of Policy, said the rise in national insurance would cost jobs:“This is a substantial increase in employers’ costs and will cause many to think twice about recruiting, make pay increases for employees much less likely and, inevitably lead to some job losses for working people.

“The rising costs associated with the National Living Wage, apprenticeship levy and other policies over recent years already risks hampering manufacturers’ investment in their workforce. This cumulative increase will send employers’ costs soaring.”

On the Corporate Tax Roadmap, Fhaheen Khan, Senior Economist, said: “Certainty and predictability are the bedrock on which investment decisions are made. This is why the Government’s commitment to corporation tax policy will be a great comfort to many businesses who have seen the tax burdens they shoulder grow heavier.

“By backing support for investment and innovation, R&D will be at the centre of propelling UK industry forward and will encourage businesses to proceed with productivity enhancing projects with greater confidence. It is imperative we continue to maintain a fine balance between existing tax burdens and the relief for good decision-making creating opportunity in the high growth areas of industry, such as automotive, aerospace and life sciences. Manufacturers now proceed confidently knowing the mission for growth is a clear and achievable objective.”

News that funding for Made Smarter’s support for helping smaller companies digitalise will be protected has also been welcomed. Make UK Digitalisation lead Nina Gryf, said: “Made Smarter has been championed by Make UK and industry for seven years and is the only programme proven to be effective in helping smaller manufacturing businesses boost productivity by successfully adopting digital technologies. Today’s announcement that the programme’s funding is being protected is good news for Britain’s manufacturers, helping ensure the sector can continue to lead the way globally. 

“The programme helps companies choose the most effective digital technologies for their individual needs. Without it, thousands of SMEs would have been unable to take those first important steps towards automation as the wider landscape of support for industrial digitalisation is fragmented and difficult for manufacturers to navigate.”