Budget 2024: UK industry reacts to latest tax reliefs and investment

HM Treasury

Yesterday the chancellor Jeremy Hunt announced the latest Budget, including new tax reliefs and investment to help the advanced manufacturing industry.

A £360m package will support innovative R&D and manufacturing projects across the life sciences, automotive and aerospace sectors, while the Green Industries Growth Accelerator will be allocated an extra £120 million to build supply chains for offshore wind and carbon capture and storage.

Commenting on the Budget Statement, Stephen Phipson, chief executive of Make UK, said: “Industry will welcome this statement which builds on a number of other key announcements in recent months. The Chancellor clearly sees manufacturing as a key sector in the economy of the future and is slowly, but surely, putting in place the building blocks of an industrial strategy.

“The extension of full expensing to leased assets will benefit smaller companies in particular and, we would urge draft legislation to be brought forward as soon as possible so that this measure can be made permanent at the earliest opportunity.”

Aerospace funding

Nearly £200m has been earmarked for joint government and industry funding into aerospace R&D projects.

Simon Weston, group managing director of ASG Group, expressed enthusiasm for the aerospace sector's growth, stating, "This injection of funds aligns perfectly with ASG Group's commitment to innovation and sustainability in aerospace. We are poised to leverage these investments to drive groundbreaking advancements in our industry."

MD of ASG Arrowsmith in Coventry, Jason Aldridge, applauded the collaborative nature of these initiatives, saying: "The joint government and industry funding creates a powerful synergy. It enables us to pool resources and expertise, fostering a collaborative environment that accelerates technological breakthroughs."

EngineeringUK

Beatrice Barleon, head of policy & public affairs at EngineeringUK, commented on the Budget: “We welcome the Government’s commitment to invest in crucial sectors, such as engineering and technology, and Small to Medium Sized Enterprises in the UK, including for example the Green Industries Growth Accelerator (GIGA). We also share the pride that the Chancellor clearly felt when talking about how the UK is becoming a leading force in the technology sector, comparing it to the Silicon Valley.

“However, given all this, we are extremely disappointed that there is no mention of the need to invest more and focus on skilling the future workforce. Without more skilled young people coming through the UK education system, UK businesses will struggle to grow and stay competitive compared to other countries.

“There is an acute STEM teacher shortage affecting young people’s STEM education and therefore their ability to pursue careers in these vital sectors, yet there was no mention of teachers and how the Government intends to support them. There was also a lack of focus on how crucial training routes, such as apprenticeships, will be enabled to grow into the future, and how this will be funded.

“We renew our ongoing call for the Government to develop a clear and properly funded STEM skills plan. This should include investment in careers outreach and education, apprenticeships for young people aged 16-19 and commitment to sustaining existing funding levels for STEM teacher professional development.”

Brandauer

Rowan Crozier, CEO of Brandauer, a Birmingham-based metal pressings and tooling specialist, commented: “For a company that has invested more than £2m in the last eighteen months, we are in favour of any incentives that make those commercial decisions easier. Full expensing is definitely one of those and I’d love to see draft legislation on extending it to leased assets passed quickly.

“This, combined with falling inflation, creates a more welcoming climate to direct company cash into people and new technologies.

“I was a bit disappointed to see a complete lack of focus on supporting companies who export in the post-Brexit world. Thousands of us are defying more bureaucracy, complex tariffs, and unequal playing fields to fly the flag for UK manufacturing and bring GDP back into this country.

“It would have been nice to see some additional support or financial incentive introduced to make international trade more accessible.

“I will always bang the drum for this illusive Industrial Strategy. I wasn’t expecting it to be included in this budget, but the government, regardless of party, must find a way of creating a strategy that is locked in place for 25 years and transcends all political bias.”

Institution of Engineering and Technology (IET)

Responding to the measures announced in the Spring Budget 2024, Stephanie Baxter, head of policy at IET, said: “The Institution of Engineering and Technology welcomes today’s Spring Budget announcements on nuclear, apprenticeships and R&D investment.

“Further developing the UK’s nuclear capacity, particularly in small modular reactor development will be critical to support the move towards net-zero. However, this must be underpinned by a strong skills pipeline. That is why we welcome the further investment for apprenticeships in key growth sectors, including nuclear technicians and electrical power network engineers, which will address shortages in the sustainability and digital skills pipeline – key to sustainable, long-term economic growth.

“However, whilst increasing the number of apprentices will be crucial to fixing the skills pipeline in the long-term, there remain significant gaps in the existing workforce. That is why we were disappointed to see that, once again, calls to reform the Apprenticeship Levy by making it more flexible for employers to upskill and reskill existing employees, particularly with micro-credentials in new and emerging technologies like AI and digital twins, has been ignored.

“In order to maximise the potential of R&D investment, it must be accompanied by plans to upskill workers in the adoption of new technologies. For example, digital twin technology can reduce down-time for manufacturing and optimise processes, but currently only 23% of employers surveyed in 2023 said that the UK has skills in this area.

“This is particularly the case for SMEs, who have the most to gain but the least time and resource to invest in training. We were therefore pleased to see the government’s upskilling fund pilot to help SMEs develop AI skills, and look forward to seeing further plans set out in the SME Digital Adoption Taskforce. Only by remaining agile will we plug skill gaps now and in the future.

“There is also clear recognition in this Budget about the role technology plays in improving productivity, especially in the NHS – where interoperability remains a significant hurdle. The application of engineering technologies to healthcare promises a revolution in the way we diagnose, monitor and treat disease, and will empower healthy lives.”

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