British manufacturers are calling for action on industrial energy costs, business taxation and investment incentives ahead of today’s Autumn Budget, warning that high operating costs are making it harder to justify new production capacity in the UK.
Research from Make UK and RSM underlines the tension between industrial investment ambitions and the commercial conditions facing businesses. Their Investment Monitor 2026 found that 56% of manufacturers consider Britain less attractive for investment than it was three to five years ago. However, among those considering a significant expansion in production capacity within the next 12 to 24 months, 62% still want to prioritise the UK.
That appetite for domestic investment gives the Chancellor an opportunity to address the costs influencing decisions on new facilities, machinery and employment.
Make UK wants the British Industrial Competitiveness Scheme expanded to all manufacturers and implemented sooner. It is also calling for electricity policy levies to be funded through general taxation, arguing that British producers continue to face an international disadvantage from high industrial power prices.
Energy costs are especially significant in operations involving metalworking, heat treatment and other electricity-intensive processes, where sustained price differences can alter the economics of manufacturing components domestically.
Paul McFadyen, Chairman of industrial metals supplier metals4U, said: “British manufacturers are facing a number of pressures including rising global tariffs, increased material costs and soaring energy prices. This situation is not conducive to sector growth, and the industry will need targeted support to ease the burden.”
McFadyen is seeking reductions in energy costs, business rates and compliance pressures, alongside investment in infrastructure and housing that could strengthen demand across manufacturing supply chains. He has also urged greater consideration of British suppliers in public procurement.
Taxation features prominently in manufacturers’ investment calculations. The Investment Monitor found that 35% of respondents identified a more supportive tax environment as a factor that would encourage additional investment, compared with 24% in the previous year.
Make UK’s proposals include greater transitional business rates relief and an increase in the employer National Insurance contributions threshold from £5,000 to £7,500. Both measures are intended to release funds that businesses could otherwise put towards recruitment and investment.
Innovation incentives and workforce development are also central to the industry’s demands.
Stuart Weekes, Partner and Head of Manufacturing at Crowe, said: “Greater support for energy-intensive industries, alongside investment in skills and workforce development, would help manufacturers remain competitive and build the talent pipeline needed for the future.”
Weekes has called for stronger R&D tax incentives, highlighting the reduced value of relief available to many profitable SMEs since 2023. He also sees opportunities for manufacturers to diversify into defence and aerospace, provided businesses receive practical support and clearer routes into procurement programmes.
Investment plans are further complicated by pressure on working capital. Research commissioned by eCapital UK among 500 business-to-business SME finance decision-makers found that 46% of manufacturing respondents considered cash-flow management harder than expected. Among manufacturing businesses experiencing cash-flow difficulties, 61% cited late customer payments and 56% rising operating costs.
Delayed payments can restrict the cash available for materials, wages and equipment deposits. For manufacturers considering automation or capacity expansion, financing requirements arise well before new machinery begins generating additional revenue.
Make UK is also seeking higher apprenticeship funding bands and an expansion of the Made Smarter programme to cover AI adoption and energy efficiency. The proposals address skills and productivity constraints, although businesses would still need sufficient capital and technical expertise to implement new systems.
Manufacturers will therefore be examining today’s Budget for specific measures on energy, taxation, technical training and investment support. The scope, eligibility and timing of those measures will determine how far they influence decisions about expanding production in Britain.
