Industry loses out to vote winning

British industry was left with little to shout about after the Budget on Wednesday, with only a handful of measures aimed directly at business.

British industry was left with little to shout about after the Budget on Wednesday, with only a handful of measures aimed directly at business — but plenty more targeted towards the forthcoming general election.

In what looked like a classic pre-election Budget, the chancellor offered a range of concessions to families, people on lower incomes, and the public sector.

But many of the calls from UK industry were ignored, with no further concessions on the Climate Change Levy, and nothing on capital allowances to boost investment.Instead Gordon Brown made it clear early in his speech that he thought manufacturing industry appeared to be in reasonable shape, pointing to 1.6% growth last year, a rise in productivity

of more than 4%, exports up 11.8% and a 2% growth in business investment.One of the most widely expected moves — to bring in tax credits for R&D spending by large companies — has been put back a year, with a consultation process over the coming 12 months to work out how the scheme, worth an estimated £250m, will operate.

Industry gave a cool reaction to the chancellor’s speech, with Stephen Radley, the EEF’s chief economist describing it only as ‘slightly helpful’.

However Mike Legg, managing director of machine tool group Hitachi Seiki UK, said he was extremely disappointed, describing the Budget as ‘blatant electioneering’. ‘The chancellor has done nothing to address the problems manufacturers face, and nothing to improve the productivity gap between the UK and its major competitors. He had the opportunity to invest in manufacturing’s future, but instead he chose to use it as a blatant give-away Budget before the election,’ Legg said.

Geoff Noon, analyst at the Machine Tool Technologies Association, said the budget was ‘all talk and no action’, given that the chancellor had been promoting the issue of UK productivity over the last four years but had done very little to support improvements.

The CBI however said Brown had successfully resisted the temptation to spend rashly before the election, and it welcomed moves to help smaller firms, as well as a number of measures to boost regional development.

‘The fly in the ointment was that he did little to soften the blow of the Climate Change Levy, which is seriously damaging UK competitiveness,’ said CBI director general Digby Jones.

The R&D tax credit system will be welcomed, and in view of the likely complexity — and the requirements to get it through the European Commission — the one-year delay is not surprising.

Ben Taylor, assistant chief executive at Renishaw said: ‘We have been promoting the issue of R&D tax credits for quite some time, as they are a good discriminator of who gets the right money, by ensuring it goes towards the people with the ideas that are going to make a profit.’

Many of the new measures announced in the Budget will start life as technical papers and consultation documents over the next few months, which looks to be an inevitable consequence of the looming General Election.

Carol Barrie, head of tax for RSM Robson Rhodes’ midlands region, said that the lack of parliamentary time between now and a May election meant that the scope of the Budget had to be limited.

‘It’s a Budget of putting things on hold,’ Barrie said. ‘The chancellor is buying himself more time. Many of the measures announced today have already been discussed and elaborated over the past 12 months. But those that haven’t are subject to “technical notes” and consultation, so won’t be happening anytime soon.’

There was also good news on training, with a pledge to boost the number of modern apprenticeships by nearly 50% to 300,000, and the promise of tax credits for employers carrying out training.

Hauliers also look set to benefit from a cut in duty on trucks to match the lowest levels in Europe.