UK industry reacts to Jeremy Hunt’s Autumn Statement

Chancellor Jeremy Hunt has set out a plan in his Autumn Statement to unlock growth and productivity by boosting business investment by £20bn a year.

Businesses will benefit from the biggest business tax cut in modern British history, the government says. As signalled in the Spring Budget, the chancellor announced permanent Full Expensing: Invest for Less for those investing in IT equipment, plant, and machinery.

Full Expensing: Invest for Less is a permanent tax cut of £11bn a year, boosting business investment by £14bn across the forecast period and helping to grow the economy.

With the tax cut now permanent, the UK will continue to have both the lowest headline corporation tax rate in the G7 and the most generous capital allowances in the OECD group of major advanced economies, such as the US, Japan, South Korea and Germany. Since the introduction of the super deduction – the predecessor to full expensing – in 2021, investment in the UK has grown the fastest in the G7.

Permanent Full Expensing aims to create the certainty that businesses need to confidently invest for less. A company can now permanently claim 100% capital allowances on qualifying main rate plant and machinery investments, meaning that for every pound invested its taxes are cut by up to 25p.

The Climate Change Agreement Scheme will also be extended, giving energy intensive businesses like steel around £300m of tax relief every year until 2033 to encourage investment in energy efficiency and support the Net Zero transition.

£4.5bn of funding for British manufacturers in the high-growth industries of the future, including £960m earmarked for the Green Industries Growth Accelerator to support clean energy.

Three advanced manufacturing Investment Zones will be established in Greater Manchester, East Midlands, and West Midlands – together generating £3.4bn of private investment and creating 65,000 high-quality jobs within the next decade.

The Investment Zones programme and freeport tax reliefs will be extended from 5 years to 10 years, and a new £150m Investment Opportunity Fund will support Investment Zones and Freeports to secure specific business investment opportunities.

Commenting on the Autumn Statement, Stephen Phipson, chief executive of Make UK, said: “This was a bold statement by the Chancellor who has worked hard to understand industry’s needs and deliver a transformational strategy designed to turbo charge investment.

“Manufacturers will applaud this focus on addressing the painful achilles heel that has troubled the economy for decades.  The biggest factor that companies want when planning investment decisions is certainty in policy and this has now been provided by making full expensing permanent.

“Industry will also welcome measures to boost engineering apprenticeships and stimulate advanced manufacturing, which will be vital in boosting high value growth and high skill employment in the economy of the future.

“The Chancellor has worked closely with Make UK and promised an autumn statement with manufacturing at its heart. He has delivered on that commitment and it is now down to industry to pick up the gauntlet.”

On full expensing, Fhaheen Khan, senior economist at Make UK, said: “Making full expensing permanent shows the Chancellor is serious about promoting business investment and bringing an end to continual, short term policy sugar rushes in favour of a stable and steady approach to improving productivity and growth.

“Manufacturing is the most investment intensive sector with the majority of companies having long term cycles of five to seven years. This change reflects that and will provide companies with the certainty and stability they have long been craving for, while making the UK a top five nation in its attractiveness to global corporations who are looking for the best places to invest.”

On Investment Zones, James Brougham, another senior economist at Make UK continued: “The Chancellor has listened to concerns held by industry that the previous five-year time frame for fiscal incentives in Investment Zones will be too short to maximise investment potential. With today’s announcement that these will be extended to ten years and the funding envelope for flexible spending doubled to £160 million, the sector will be assured that the Government is committed to a longer-term plan to boost investment.

“Long-term business environment and policy confidence from the Government is what the sector has needed to drive forward investment and today’s announcement makes great strides towards that goal.”

Steve Morley, president of the Confederation of British Metalforming, commented: “The big win for our members is the 'full expensing' announcement. I’ve witnessed first-hand how a few of our members have benefitted from investment and hopefully this incentive should give others more fiscal confidence to look at where they can invest, in order to become more efficient or to take advantage of new opportunities they are seeing.

“We were one of 200 businesses and organisations that signed the CBI and Make UK Declaration, and we genuinely believe this decision could prove the difference between thousands of manufacturers pressing the button on new machinery and technology or not.

“Hunt’s £4.5bn package for advanced manufacturing was already announced before the Autumn Statement and was intended to grab headlines. It certainly did that, but the bigger picture is that this support does not start until 2025 (and possibly after another election) and will this vital funding make its way downstream to the tier 1s, tier 2s and tier 3 in the supply chain.

“This is what we’ll be actively lobbying for and ensuring every manufacturer has an opportunity to benefit from grants, collaborative innovation projects or by ring-fencing UK content in big infrastructure and vehicle projects.

“A 10% increase in the minimum wage is good for workers. However, it can push wage inflation inside already squeezed SMEs.

“Whilst most of our members pay above the living wage, we have heard from them that previous rises have kickstarted other employees in their workforce asking for higher wages. This could cut margins even further.”

Make UK
www.makeuk.org

CBM
www.thecbm.co.uk