Make UK sets out ‘shock and awe’ proposals to protect manufacturers

VAT on energy bills should be cut by 75 per cent and business reliefs extended to manufacturers as part of a comprehensive package of ‘shock and awe’ measures proposed by Make UK.

AdobeStock/Photocreo Bednarek

Survey data from the manufacturers’ organisation shows the impact of rising energy costs on companies, along with the cumulative effect of increases in other expenses including National Insurance Contributions and the proposed increase in Corporation Tax, which from April 2023 will increase to 25 per cent for companies whose taxable profits exceed £250,000.

A fifth of companies believe energy costs will be an issue for two years, whilst 74 per cent of manufacturers surveyed said they are facing increased transportation costs and 82 per cent reported transport disruption as an issue for their business. Four in ten companies surveyed said that disruption at the Dover Calais crossing was causing either catastrophic or major disruption to their business.

Input prices are currently at 24 per cent, the highest since records began. According to S&P Global/CIPS UK Manufacturing PMI for July, input prices for manufacturers increased across – but were not limited to - chemicals, electronics, metals, packaging, and timber as well as transportation and energy. The monthly PMI report cited the war in Ukraine, exchange rates, global inflationary pressures and input shortages as adding to increased purchasing costs.


Make UK is making specific proposals on energy, plus measures to aid cashflow, provide greater access to labour supply (93,000 UK manufacturing vacancies are currently unfilled), along with initiatives to encourage investment, particularly in energy efficiency technologies.

In a statement, Make UK’s chief executive Stephen Phipson said: “Whilst industry has recovered strongly over the last year, we are clearly heading for very stormy waters in the face of eyewatering increases in energy costs and a difficult international environment.  This threatens to shatter expectations of a sustained recovery from the pandemic.

“Some of the factors impacting companies are global and cannot be contained by the UK government alone. However…given the rate at which companies are burning through their balance sheets just to survive, it must take immediate and substantial measures to help shield companies from the worst impact of escalating costs and help protect jobs.

“We need a ‘shock and awe’ suite of proposals to protect viable companies and jobs and we need them now. Manufacturers cannot afford to wait for a functioning government to get its feet under the table.”

Immediate measures being proposed by Make UK include:

  • Reduce VAT on business energy bills from 20 per cent to 5 per cent
  • Reverse the National Insurance Contributions increased from 2022
  • Extend current business reliefs applied to other sectors to manufacturing
  • Extend business rates reliefs for both building improvements and eligible plant & machinery
  • Introduce a long-term capital allowance regime to spur investment in green technologies and energy efficiency measures to reduce energy consumption
  • Make the Annual Investment Allowance permanent
  • Undertake a full and fundamental reform of Business Rates
  • Commission the Migration Advisory Committee to review and revise the shortage occupation list by early 2023 at the latest

Make UK’s latest survey follows CBI data that shows over two-thirds of firms expecting their energy costs to increase over the next quarter, and a third of businesses expecting energy price rises to stifle current or planned investment in energy efficiency or Net Zero measures. Outside of manufacturing, The BMJ reports today (Sept 1) that some patient care will have to be reduced at English Hospital Trusts to cope with rising energy costs, which are predicted to be up to three times higher than a year ago.

Which combination of proposed Make UK measures do you want to see implemented right now? Let us know in the Comments below.