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💼 Manufacturers priorities this Spring Fiscal Statement

Manufacturing Mondays
Manufacturing Mondays
This week’s Spring Statement cannot be seen as an ‘update’.
The Chancellor can’t shy away from the realities facing manufacturers today - a multitude of increasing cost pressures from the soaring cost of raw materials, snowballing wage inflation, to spiralling energy costs - all of which could prove to be existential threats to the industry.
All the evidence points to a situation where an increasing number of manufacturers face a fight for survival, in fact, almost 1 in 10 businesses see the rising cost of raw materials and energy as business threatening.
Failure to address the spiralling cost of doing business right now will risk these short-term challenges becoming baked in.
Crucially, it risks our long-term ambitions to transition to a net-zero economy and build resilient workforces, becoming a distant reality.
All eyes turn to the Chancellor on Wednesday.

Severity of cost increases to manufacturers
Almost 1 in 10 businesses see the rising cost of raw materials and energy as business threatening, with even more, facing major price increases that could become business threatening.
Our Q1 Manufacturing Outlook data shows that these price rises are continuing to be passed onto the customer. The consequence of all this is that business confidence is falling.
Failure to address the spiralling cost of doing business right now risks these short-term challenges becoming baked it. Crucially it risks our long-term ambitions to transition to a net-zero economy, accelerate digital adoption and build the skilled workforce of the future.
5 actions the Chancellor can take
💷 Limit the tax burden
Delay the planned National Insurance Contribution rise in April until the economy is in a more robust position.
60% of manufacturers say the National Insurance rise will have a moderate or significant impact on recruitment. The planned NICs rise should be postponed until the economy is in a more robust position, a position where such a significant change such as this wouldn’t stand to threaten what is an already fragile economic recovery. We believe that the public purse should be recouped not through means of taxing the supply-side during a supply crisis, and instead, should focus on means of recovering the purse through growth.
Reinstate business rates relief for small businesses and bring forward the improvement relief and investment relief exemptions by 12 months.
Especially for small businesses, the Government must reinstate the 12-month business rates relief mechanism that was utilised during the COVID-19 pandemic. This will ease the cost pressures manufacturers are facing as many businesses are already considering shutting down temporarily to reduce energy consumption. For businesses that may not qualify for this relief, the Government should bring forward the improvement relief exemption from 2023 to 2022 so that they can better manage their cashflow whilst still plan productive property investments.
📈 Reduce the soaring business costs
With immediate effect Government should:
  • Reduce the carbon price via the cost control mechanism within the UK ETS providing immediate support for all manufacturers.
  • Remove the additional Carbon Price Support (CPS) tax that only UK consumers pay, which would drive down the electricity price.
  • Consider removing the Climate Change Levy entirely to further reduce costs.
For Energy Intensive Industries the Government can go further and:
  • Increase the relief from the Renewables Levies now that the UK is no longer subject to EU State Aid rules.
  • Increase compensation for the indirect cost of carbon, benefitting the most trade-exposed and energy-intensive industries.
  • Implement network cost reductions for the most electro-intensive industries.
⚙ Encourage capital investment
Extend the Super Deduction scheme with a view to making it permanent at the Autumn Budget.
23% of manufacturers said the super deduction would increase their total level of investment, and 28% said they would bring forward their already existing investment plans to take advantage of the scheme. it was clear that manufacturers were using the scheme with the median investment value being £228,500. As a result, the Super Deduction policy should be re-announced with a significant extension, so that the industry can effectively plan investment in the medium to long term, moving it away from a short-term Covid intervention policy.
👨‍🔧 Tackle labour shortages
Introduce an Employer Training Fund to support businesses and workers to reskill and upskill.
Access to the right skills is a critical priority for manufacturers in 2022. This extends beyond recruiting new talent into retaining the people they already have; around 80% of manufacturers are concerned about skills leaving their business this year. The Government should introduce an Employer Training Fund to support businesses and workers to reskill and upskill. Provision for this could be made through the Adult Education Budget to establish the Employer Training Fund as a minimum three-year programme for employers to access subsidised skills training until the Lifelong Loan Entitlement becomes available to eligible adults in 2025.
✂ Cutting red tape
Further extension for CE marked products to be sold on the UK market for products where the legislation in the UK remains the same as in the EU.
This easement should be extended for as long as required for each product category and certainly until there is a potential divergence between UK and EU rules. The easement would significantly reduce a significant cost burden on industry at a time when UK business is faced with unprecedented increases in costs, particularly in the price of energy. Added burdens from cost and administrative requirements on placing goods on the GB market, will be a deterrent on international businesses selling into GB, add to the cost pressures on domestic business activity and limit good availability and choice on the GB market.
🚩 With each passing day, businesses are being kept awake wondering if tomorrow they will be able to keep their doors open and their lines running.
We need the Chancellor to listen and act at this week’s Spring Statement.
Follow us for all the reaction
We’ve been sharing our calls to date on @MakeUKCampaigns. Make sure you are following us for our reaction, comments and thoughts to Wednesday’s Statement.
And why not share your thoughts with us too, tag us, tweet us, drop us an email, we want to hear your thoughts.
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  • Ed Balls, Former Shadow Chancellor of the Exchequer
  • Declan Curry, award-winning journalist
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Copy editor: Bhavina Bharkhada, Make UK Head of Policy & Campaigns
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Manufacturing Mondays
Manufacturing Mondays @MakeUKCampaigns

We discuss the big issues impacting the UK manufacturing sector, and our policy ideas to overcome them.

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