Government urged to support manufacturing in UK Budget

The UK government needs to deliver on its promises of supporting manufacturing and upgrading infrastructure in the upcoming Budget, according to engineering bodies.

Manufacturers’ organisation EEF is calling for a parliament-long growth plan to match the Coalition’s deficit-reduction programme as part of the chancellor’s announcement on 23 March.

This should include reform to tax credits and allowances, improving access to finance and greater support for industry training, according to the group.

The Institution of Civil Engineers (ICE), meanwhile, has called on the government to provide details of how it will put the new National Infrastructure Plan (NIP) into action.

‘The fiscal mandate has reassured business about the stability of the public finances,’ said EEF chief executive Terry Scuoler.

‘Government must now send the same signal that it is serious about enhancing the competitiveness of our business environment by matching this with a robust growth mandate.

‘This should demonstrate that all parts of government are working together to deliver the kind of growth our economy needs and that it will focus on this task relentlessly over this parliament.’

EEF is recommending reform of the research and development (R&D) tax credit to take into account development costs and modernisation of the capital allowances regime so that it recognises the true cost of re-investment by manufacturers.

It is also calling for measures to increase competition in the banking system and examining ways to increase the development of alternative sources of finance, especially non-bank debt and venture capital.

The government should review future funding and demand for 14–19 diplomas with the aim of increasing support and improving delivery, and introduce a pilot initiative to support small and medium-sized enterprise (SME) collaboration on industry placements, the group said.

Paul Everett, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said the government needed to create a more attractive investment environment to sustain the industry beyond current enthusiasm for rebalancing the economy.

‘For a capital-intensive business such as our own, capital allowances make a difference,’ he told The Engineer. ‘We are competing with sites around the world and therefore making that investment easier or more attractive in the UK is key.’

He added that the current R&D regime tended to favour banks and service companies paying for software development.

‘We would like to see some tweaks to the tax-credit system to make it more attractive for manufacturers… We want a system that is better targeted at the types of business we want to do R&D, which is companies in the supply chain.’

The ICE said the government had recognised infrastructure as a key driver of competitiveness and economic growth with the NIP but needed to set out long-term investment needs and priorities, along with the actions to deliver them.

‘Government must get started on the delivery and implementation of its plans in order to make real progress,’ said ICE director-general Tom Foulkes.

‘This will mark the end of the “stop/start” approach to infrastructure development — an approach that in previous decades has led to under-investment in economic infrastructure, undermined skills development and innovation.’