Following the Chancellor’s Autumn Budget 2017 update, Menzies Manufacturing sector team have reviewed the impact of Philip Hammond’s announcement upon the UK manufacturing community.
When we set out our budget wishlist and predictions we wanted to see a focus on collaborating with manufacturers to inspire and engage the next generation and to support investment in technology to make UK manufacturers world leaders particularly in the automotive sector.
It is particularly pleasing to note that from the Budget and the announcements in the run up to it that the government have recognised this need and are committed to working with industry to develop the engineers of the future. This is recognised in the commitment to offer one million direct and inspiring experiences of engineering to young people throughout 2018 to address the predicted shortfall of 20,000 graduates a year. We hope that the government make it easy for SMEs to actively participate in this as they can provide valuable and diverse experience to these potential engineers of the future.
The recent announcement of £18.4m of funding by innovate UK for manufacturing sector projects is welcome particularly as this has primarily focused on small business and SME’s but sadly is not supported by improvements to the R & D SME scheme.
The UK automotive industry is a crucial part of the economy and with the uncertainties of Brexit the step to announce driverless cars on the UK roads by 2021 shows an ambition to become global leader in the automotive sector and this is further enhanced by the announcement of £540m to support the growth of electric cars.
Here are the other Budget specific thoughts for the manufacturing sector:
The Chancellor’s description of his vision that global Britain will be a “hub for enterprise and innovation”, at its heart a “dynamic and innovative economy” came amongst announcements that the OBR has reduced down productivity estimates. Whilst making clear the government’s commitment to enterprise and innovation this reflects the challenges faced by businesses, including the 5.5m small businesses, in UK.
Announcement that RDEC (the R & D scheme applicable primarily to large companies) will increase to 12%. This is not the improvement to the relief that most SMEs were hoping for but will provide vital funding for larger businesses to encourage global investment in manufacturing in UK and support larger owner managed businesses investing in R&D.
Disappointingly, no specific tax breaks for capital investment were announced but the government will support investment in capital projects by unlocking over £20 billion of patient capital investment to finance growth in innovative firms including a doubling of the EIS limit for knowledge intensive companies. This will help innovative manufacturers raise significantly more finance effectively and finance investment in growth and innovation.
Most entrepreneurs’ acknowledge the importance of having skilled and motivated employees, so it is promising to hear the announcement that the government is to:
- Increase investment in training in digital skills;
- Collaborate with external parties on a comprehensive re-training skills program;
- Continue investment in apprenticeships; and
- Offer incentives to encourage younger generations to develop skills needed in a modern manufacturing and industrial environment.
Get more input on the Autumn Budget 2017 implications for the Manufacturing sector by speaking to our sector team.
Find out more about the Menzies Manufacturing business advisory services.