A Budget for business?

Following the Budget, Eureka takes a look at some of the reactions from industry and engineering.

Rishi Sunak unveiled a new series of measures, including a doubling of the cash incentives to take on new apprentices; an additional £126 million in England for high quality work placements and training for 16- to 24-year-olds; a new £7 million fund to help employers set up and expand portable apprenticeships; and a new UK-wide management programme to upskill 30,000 small and medium-sized enterprises over the next three years.

Stephen Mitchell, Director of Apprentices and Technical Training, Make UK

“We welcome the Chancellor’s new measures to encourage more employers to take on apprentices - it’s vital that they plan for the future to avoid a skills gap, as well as ensuring the next generation of talent is given every opportunity.

“We have over 2,000 young people in our talent pool looking for apprenticeship opportunities, including a considerable number of young women, and our recruitment process means employers can access applications and candidates with minimal fuss and delay.”

Alan Laing, Managing Director for UK & Ireland at IFS

“This is clearly a budget designed to put a shot in the arm of the economy, and to drive growth, productivity, and secure jobs over the short term. In that regard, there is much to be positive about, but it remains to be seen whether the measures laid out will have the desired effect and what the longer-term strategy will be.

“Core elements of the UK economy, including the construction, manufacturing, and life science sectors will find some measures encouraging – notably those that look to boost new housebuilding, and the ‘super-deduction’ tax relief for investments in technology and equipment. The funding increase for digital skills, apprenticeships and trainees is also a positive step and will go some way to both addressing the skills gap and the current levels of unemployment. These measures should help to create secure jobs, address the shortage of affordable housing, and provide manufacturers with the encouragement they need to invest in UK operations and facilities – particularly if they can also reap the benefits of the eight new freeports due to be established across the country. The Chancellor has also recognised the need to do more to realise our net zero ambitions and promote investment in cleaner energy and the circular economy – however, measures in this area fall far short of those needed to bring about the kind of change needed to hit our current sustainability targets. This budget should always have been focused on balancing the short and long-term needs of the country and economy, rather than balancing the books over the course of this parliament. Only time will tell whether the Chancellor has gone far enough, or whether internal party politics has hindered efforts to ‘build back better’.”

On freeports:

Colin Elkins, VP, Manufacturing Industries at IFS, said: “The establishment of eight new freeports will be received positively by many manufacturers with operations here in the UK. These reduced tariff trading zones have the potential to dramatically change the business environment and make it very attractive for exporters and for those looking to sell into the UK. With the additional measures introduced to help businesses take advantage of new technologies and equipment, and channel funds into research and development through the ‘super-deduction’, organisations are further incentivised to invest in UK manufacturing operations. This will create and secure skilled jobs in and around the new freeports, as well as making the UK much more competitive on the international stage by maximising inward investment over the next two years.”

Earl Yardley, director at Industrial Vision Systems

“There needs to be an incentive to attract more engineers into the industry and this starts within schools and education institutions. Last year it was identified that there is an annual demand for at least 124,000 engineers and technicians. Our young workers and students can help address the skills gap and drive the sector forwards. There is a misconception that engineering is limited to factory floor and production. This is simply not the case. In fact, it is fuelled by some of the most ground-breaking and innovative technology we have ever seen. To encourage STEM subjects, there needs to be a change in policy. We can’t focus solely on service based industries to recover the economy; we must get the UK back to building and creating things. GDP has taken such a hit because we tend, as a country, to rely on service industries rather than manufacturing, particularly compared to the likes of Germany, US, China, and India. We need to re-address this balance. With Brexit done, we have the power to change policy to help encourage a market-orientated approach to manufacturing, engineering and scientific research. We have to be more competitive and productive. Policy needs to encourage inward investment into the UK, making the UK an attractive place to do business in the short, medium and long-term.”

Andrew England, tax partner and manufacturing sector specialist at accountancy firm, Menzies LLP

“Given the current financial challenges facing manufacturing companies it is positive to see no immediate corporation tax rate hike and the timeframe for the increases means businesses can plan ahead.

“The 25% corporation tax rate is higher than predicted and will have a significant impact. However the disproportionate impact it might have had on SMEs has been avoided to some extent, through the use of a tapering mechanism. This means businesses earning profits of £50,000 or less will remain liable for corporation tax at a rate of 19%. Only those businesses with profits above £250,000 will be liable for the full 25% rate of corporation tax.”

“As a sector manufacturing has been significantly impacted by Covid-related restrictions, so the ability to carry back losses of up to £2m to the previous years is very welcome and could provide a valuable financial injection for struggling businesses.

“Automation and digitalisation are crucial to the development of the UK manufacturing sector to ensure it can compete globally. The introduction of a ‘super deduction’ that will enable businesses to claim tax relief on 130% of capital expenditure on qualifying plant and machinery and 50% of special rate expenditure, could be a very valuable incentive to help boost productivity and efficiency. The potential interaction of this with the ability to carry back losses for up to three years could help to provide much-needed financial stimulus to support the cost of investment.”

Mark Smith, Partner – Innovation Incentives, at Ayming UK

Once again, the intention to become an innovation powerhouse was prominent in this year’s budget. It’s great to see the recognition that innovation is important despite fiscal tightening so, from an R&D perspective, the message was promising. The Chancellor expressed that the Government wants to make the UK the best place in the world for companies to innovate and his decision to consult the industry on R&D schemes is a wise one and something we have recommended to HMRC directly.