The UK electorate may have voted for a change in government, but underpinning the Labour manifesto is a strong emphasis on stability. Whilst in some key policy areas it remains to be seen what practical changes will apply to businesses in the manufacturing space, there is no doubt that the sector will be impacted by a wide range of policies. Not only are manufacturers significant consumers of energy and imported materials; they are also reliant on attracting and retaining a skilled workforce, as well as remaining abreast of technological developments. As ever, the ability of the sector to adapt and develop will be key to taking advantage of opportunities as they arise and planning proactively for some of the challenges that a change in government may bring.

Industrial Strategy and Carbon output

Labour promised to implement a new industrial strategy, including the re-instatement of an Industrial Strategy Council (ISC) with a view to building a partnership between the public and private sectors to restore growth, spur innovation and meet the challenges of the climate crisis. The ISC will comprise full-time experts working together with an advisory board of leading figures in business. Whilst many business owners may view the potential increased government influence on the private sector with some trepidation, this could also present an opportunity for business leaders to work collaboratively with government representatives and other stakeholders.

The new government’s manifesto also sets out plans for National Wealth Fund: a government-owned financial institution set up to invest in ports, giga-factories and the steel industry, as well as net zero initiatives. It should be noted that this proposal is not dissimilar to the existing UK Infrastructure Bank, and so the practical implications of this change remain to be seen.

A manifesto pledge which would see £500m of funds available annually from 2026 to act as an incentive for manufacturers developing clean energy does not provide the sector with any additional support in the short to medium term, and many businesses are already investing significantly in this area. Labour expect a push towards cleaner power to create good, well-paid jobs across the UK. However, it will fall to businesses to recruit, train and retain this much-needed resource.

Corporation Tax and Tax Reliefs

Labour’s manifesto stated that corporation tax would be capped at 25%, so there are no immediate changes for businesses operating above the £250,000 small profits threshold and it appears unlikely that the lower rate of 19% would be withdrawn, given the importance of SMEs to the economy.

Reliefs available for capital expenditure remain a key area of interest for many manufacturers, so Labour’s promise to retain the permanent full expensing rules and £1m AIA limit should allow the sector to continue to invest in property, plant and equipment with relative confidence. Manufacturers operating within a group structure whereby assets are leased between group companies may be disappointed by the absence of any pledges to review the rules relating to leased assets, which can considerably lengthen the timing difference between purchasing an asset and obtaining full tax relief for this expenditure.

The R&D tax credits scheme was not specifically mentioned in Labour’s election manifesto – further to significant recent changes to the regime, businesses may welcome some clarity and stability in this area. This is also reflected in Labour’s pledge to move to 10 year funding cycles for R&D reliefs.

Employment taxes and skills

Labour have pledged not to increase taxes on workers, which means there are no expected changes to income tax or national insurance for employers to take into consideration. The manufacturing sector relies on a large workforce ranging from low skilled workers to highly specialised engineering roles, so Labour’s promise to adjust the minimum wage to account for cost of living increases may have an impact on margins, especially for smaller manufacturers who may lack the bargaining power to pass on cost increases to their customers.

Labour’s pledge to improve workers’ rights, including banning zero-hour contracts will have a further cost implication for the sector which relies on flexibility within its workforce to adapt to short term changes in demand. On the other hand, a youth guarantee for access to training could help to address a growing skills gap. Longer term, it is possible that Labour’s proposed changes could improve job satisfaction, generating much needed stability in the employment market.


Labour’s aim to enhance the UK’s trade and investment relationship with the EU by eliminating trade barriers and reducing border checks would be considered a positive move which has the potential of reducing the costs of importing and exporting goods to the EU.

Should you have any questions for how your business in the Manufacturing sector could be impacted by the recent general election, please do reach out and we will be happy to discuss.

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