Manufacturers this week warned that Chancellor Gordon Brown’s green Budget would come to nothing if the economy did not match his optimistic forecasts.
The proposals unveiled on Tuesday got a warm reception, as many in manufacturing welcomed moves to help small companies boost productivity and funding.
‘The ideas are great,’ said Christopher Key, partner with consultant Robson Rhodes’ Engineering Group in Birmingham. He said the proposals were in tune with what Midlands engineering firms had been demanding from the Government: tax credits for R&D spending and measures to retain skilled staff.
‘But we need to see if the Government can afford to deliver them. What we don’t want is corporation tax or VAT rising to pay for it.’
Some observers worry that if the economy does not grow as fast as the Chancellor predicts most economists doubt that it will then many of the most effective measures may have to be scrapped as part of cutbacks.
‘Measures aimed at boosting investment in small businesses via tax breaks look most vulnerable, and hinge on whether they can find the money,’ said Elizabeth Amos, director of the Institute for Manufacturing. ‘The other question is how successful can these measures be on the manufacturing side, which is already suffering from serious problems in the world economy.’
The Engineering Employers’ Federation described the proposals as ‘imaginative’. ‘The focus on productivity, education and training and getting business people into schools gets our full support,’ said a spokesman. ‘But we believe their forecasts are optimistic, to put it mildly.’
But some criticised the proposals for focusing on venture capital and start-ups.
‘We can’t see much here to help existing small and medium-sized companies,’ said a spokesman for the Machine Tool Technologies Association. ‘The reduction in corporation tax is not enough when we have 20 years of investment to catch up with.’
* News analysis, page 14