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📅 A 100 day plan for the new Prime Minister

Manufacturing Mondays
Manufacturing Mondays
Getting the keys to No.10 is daunting. With significant issues in the Prime Minister’s in-tray, this is will be a particularly difficult period for the new incoming PM.
This makes the all-important first 100 days *even* more important.
Luckily, here at Make UK HQ, we’ve pulled together a plan for those first 100 days, detailing what the Prime Minister needs to tackle now, and how.
Happy Monday manufacturing champion

Schedule an Emergency Budget
The immediate challenges are simply too grave to ignore - the foremost energy costs. The new PM should immediately call an Emergency Budget to begin to tackle the cost of doing business crisis. With the OBR having already worked on a forecast since July, it is in a position to publish such a forecast alongside a potential emergency fiscal event in September.
💼 But what should the Budget introduce to tackle energy costs?
  1. Out-of-control energy bills are now business threatening for 60% of manufacturers – up from 8% just four months ago. Government must immediately scrap the Carbon Price Support – a levy only UK businesses pay and look at introducing an Industry Price Cap to freeze energy bills at an agreed rate.
  2. A worrying 12% of manufacturers have already made job cuts as a direct result of increased energy bills. Government should explore Industry Price Cap to freeze prices at an agreed rate – funded either directly by the Government or explore a way of working with banks to fund an arrangement to finance a cap.
  3. 42% of manufacturers surveyed said that their electricity bills have increased by 100% in the past 12 months. Government should maximise incentives to enable businesses to be less reliant on the grid including extending the 100% business rates exemption for plant and machinery from 12 months to three years.
Our full Budget submission will be available here so favourite this page.
Immediately commission MAC
We no longer have just a skills shortage, but a labour shortage too - 36% of vacancies in manufacturing are proving hard to fill because of applicants lacking the appropriate skills, qualifications, or experience (this compares to the 24% average across all industries).
And vacancies in the manufacturing sector are at a 20-year high, demonstrating the extent to which immediate labour shortages are affecting manufacturers currently. This is why we are seeing 24% of manufacturers recruiting from outside the UK due to a lack of UK applicants. 
💷 We estimate the cost of lost productivity due to vacancies in manufacturing being left unfulfilled in 2022 amounts to £7.7 billion, or £21 million a day in lost output for UK GDP.
It is now more than two years since the Government last commissioned a review of the Shortage Occupation List (SOL). There are a number of engineering roles which are currently on the SOL, and these should remain on the list to ease current shortages. However, manufacturers currently face waiting 12 months or more to recruit for a range of key roles across the workforce where they cannot fill vacancies from the domestic labour force.
The Home Office should commission the Migration Advisory Committee to review the SOL immediately, with a view to having a revised version of the list in place by early 2023 at the latest.
Launch a full review of the Apprenticeship Levy
Our productivity success is built on highly skilled workers and apprentices. But the current apprenticeship levy system isn’t working as best it can. In fact, comparisons of pre and post-pandemic show in 2016/17 (pre-Levy) there were 75,020 manufacturing and engineering starts. In 2018/19 (post Levy) this fell to 59,970. In 2020/21 (post-Levy and post-pandemic) this fell to 39,510.
Manufacturers are restricted in what they spend it on, how they spend it and when they spend it. What was sold as a ‘win-win’ for sectors such as manufacturing but in its current form, it remains a ‘lose-lose’.
🔙 It is unsurprising that estimates suggest unspent Levy funds worth £3.3bn have been clawed back by HM Treasury since 2019.
This is at a time when employers are being left out of pocket because they cannot use their funds on training and as a result, apprenticeship starts have fallen dramatically.
The new PM should immediately task the Department for Education with launching a full-scale review of the system with a view to overhauling the Apprenticeship Levy to ensure British people are among the most productive and highly skilled workers in the world.
Stimulate much needed investment
Soaring energy costs and wage inflation are not the only costs that are crippling manufacturers at this time. In the last 12 months, we have seen both employer and employee National Insurance Contributions (NICs) increase, as well as National Living Wage and National Minimum Wage rate rises. In the coming months, manufacturers will be faced with a Corporation Tax increase and likely increase in business rates following the revaluation in April.
Private manufacturing investment is still 4% below its pre-pandemic level in 2019, driven primarily by the worsening cashflow position of manufacturers.
But manufacturers plan to accelerate investment in capital in the next two years, and given existing evidence suggests they tend to use past profits as the preferred method of financing investment, Government should consider how capital allowances can be used to stimulate greater investment during a cost of doing business crisis. 
Government should consider enabling full expensing for up to two years, as well as making the increase to the Annual Investment Allowance permanent. With 60% of manufacturers saying the National Insurance rise will have a moderate or significant impact on recruitment, Government should reverse the decision to increase NICs that came into force in April 2022.
In the longer term, Government should also incentivise investment in digital and green technologies by expanding the R&D tax credit to include capital equipment, especially for technologies that support industrial decarbonisation.
Develop an economic vision
Since 2016 we have veered from crisis to crisis. This has negatively impacted investment intentions, but more worryingly the UK plc brand. The new Government must immediately work in partnership with industry to develop a long-term economic vision which has an all-encompassing National Manufacturing Plan at its core.
📈 If manufacturing output as a share of UK GDP were to increase from 10% to 15% this year, that could result in an extra £142bn to the UK economy.
This will be essential if we are to boost productivity, drive innovation, and create more of the high-skilled, high-paying jobs our economy needs. Ending a decade of stagnant productivity and real wage growth should be the new Prime Minister’s top priority. Supporting Britain’s world-beating manufacturing sector would be a great place to start.
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Copy editor: Bhavina Bharkhada, Head of Policy & Campaigns
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