Comments provided by Head of Manufacturing Caroline Milton.
With technology advancing at a rapid pace and areas such as IoT (Internet of Things), Industry 4.0, 3D printing and Artificial Intelligence gaining more prevalence, manufacturing businesses need to invest effectively to gain a competitive edge.
Manufacturing sector budget wish list
With the budget approaching, we set out below our wish list and predictions for the Manufacturing sector:
- Improvements to the R & D tax credit regime, including a simplification of criteria and better publicity, to encourage businesses to improve productivity, processes and products.
- An increase to the annual investment allowance – which is currently limited to £200,000 per annum – for manufacturing businesses which are typically capital intensive this level can slow down the growth of business and make them less competitive in a global market.
- A reconsideration of the operation of revised Patent Box regime that was introduced in response to EU challenges and the wider Base Erosion Profit Shifting project. The regime is not gaining much traction in the SME sphere due to its complexity and an overhaul is required for SMEs to perceive real value – a triggering of Brexit may create an opportunity for this to be developed into a globally competitive incentive.
- Improved transparency and presentation of sources of support for manufacturing businesses both financial and knowledge based. There have been a number of positive steps taken by government in recent years (e.g. Catapult Centres, Innovation vouchers, Knowledge Transfer Partnerships, Knowledge transfer network), but these are poorly communicated to the SME business community with the result that many eligible businesses miss out on opportunities to accelerate progress.
- The government and government funded bodies should engage more effectively with professional advisers who are often the conduit to the SME manufacturing community. Both have an investment in seeing successful SMEs, but regulation and concerns over impartiality can impede the achievement of a mutually beneficial outcome.
Some wider topics for the Spring Budget
In addition to the above, Chancellor Philip Hammond should look to address the following areas in order to rebuild confidence in the UK economy:
- Brexit – send out a clear, consistent and reassuring message to the UK and global community which will assist in stabilising of FX rates, growth forecasts and spending plans.
- A reduction in the corporation tax rate from the current 19% to assist in making the UK an attractive location for business post Brexit.
- Accessing funding support – Whilst the attempts to reduce the skills gap are positive, there are concerns within the manufacturing SME community that the amount of red tape and administration associated with accessing funding support from the Apprenticeship Levy, will turn this into an SME tax rather than an opportunity and we would like to see more focussed support for SMEs.
Get more input on the 2017 Spring Budget implications for the Manufacturing sector by speaking to our sector team.
Find out more about the Menzies Manufacturing business services.