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Commerce and Industry

The Journal For Business to Business Marketing

EEF responds to the Budget

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Commenting on today’s Budget Statement, Andy Tuscher, Yorkshire and Humber Region Director at EEF, the manufacturers’ organisation, said:

If there was ever a time when industry wanted to be left alone in a Budget then this is it. The Chancellor heeded business warnings of no major new policies which will add to costs already in the pipeline, particularly as manufacturers are at the sharp end of many of the big global challenges he alluded to. The icing on the cake would have been setting these in the context of a broader strategy for industry which still remains a gap in the Government’s armoury.

Given the weaker outlook for our economy and global volatility, the Chancellor was right to reinforce the importance of Britain remaining in the EU. Much of what he said today about stability for future generations will mean nothing if the British people vote to leave. The UK would be in uncharted waters, the consequences of which could be highly damaging.

Another Corporation tax cut is one important lever in keeping investment growth on track. The continued inclusion, however, of investment in plant and machinery in business rate calculations is a disappointment for the steel industry in particular. Government will need to do more to support steel this year.

Commenting on employment issues and the Apprenticeship Levy, Tim Thomas, EEF Director of Employment & Skills Policy, said:

Employers will be relieved that the Chancellor did not add to the wave of new employment costs already announced, including the apprenticeship levy and the national living wage, and hope that the apparent decision not to meddle with pensions tax relief proves long-lasting. Some businesses will see changes to national insurance rules on termination payments and more red-tape for those legitimately using personal service companies as unnecessary and potentially costly.

On the Apprenticeship Levy, Tim Thomas, said:

Manufacturers firmly support the government’s ambition to create more high quality apprenticeships. However, they do not support the use of a levy to get there. Industry has clearly set out what the government needs to be deliver to ensure the levy is seen as a talent generator and not a tax but today’s announcement does little to allay manufacturers’ fears, even with the announcement of a 10% top-up for levy payers.

While everyone is putting their full weight into this process, it is becoming clear that the government’s deadline of April 2017 is now seriously out of synch with companies’ planning cycles. If government wants to avoid this issue becoming a policy mess, it must push back the levy implementation date to 2018.

Commenting on business rates reform, EEF Chief Economist, Ms Lee Hopley, said:

Industry will be relieved that there is no fundamental overhaul of the business rates system and that bills look set to increase less sharply in the future. However the Chancellor’s decision to remove cheaper properties from paying business rates only increases the burden on seeking revenue from plant and machinery included in calculations. Today’s measures maintain business rates as a tax on investment and may add greater uncertainty to local authority budgets in the future given their now increased dependency on plant and machinery for future revenues.

Commenting on the Government’s response to the Business Energy Efficiency Taxation Review EEF’s Senior Energy Policy adviser, Richard Warren, said:

Manufacturers will be enormously pleased to finally see the back of the CRC energy efficiency scheme, a vastly overcomplicated tax that has had a negligible effect on energy efficiency improvements in industry. We would have liked to see the government go further, however, and relinquish the revenue stream attached to this scheme, but do at least welcome the government’s clear commitment to make changes to the Climate Change Levy in a genuinely revenue neutral manner.

Continuation of the Climate Change Agreements for all sectors is extremely welcome. The scheme strikes the correct balance between penalty and reward, working with the grain of business to drive investments in energy efficiency. Just as importantly, the scheme is an essential element of the package of measures protecting our most energy intensive industry from uncompetitive energy prices. Government is to be congratulated on listening to the concerns of industry and refraining from unhelpful reform.

Commenting on the Government’s announcement on the Carbon Price Support rates, EEF’s Senior Energy Policy adviser, Richard Warren, said:

Whilst we had been hoping for something more radical on the Carbon Price Floor itself, today’s commitment to continue the current freeze to the support rates beyond 2019/20 is welcome. With UK electricity consumers currently saddled with a carbon price some four to five times higher than consumers elsewhere in Europe, there can be little justification for a resumption of its original trajectory. We will continue to call for its phasing out but today’s announcement at least provides manufacturers with some certainty on cost stability for the remainder of this parliament.

Commenting on the Broadband Investment Fund, EEF Senior Business Environment Policy Adviser, Chris Richards, said:

Manufacturers need best in class provision if Britain is to take advantage of the next industrial revolution, industry will welcome today’s announcement of a Broadband Investment Fund which must be targeted to ensure this leads to a reduction in costs for business broadband by stimulating alternative providers. Only a fifth of companies believe the UK is currently at the forefront of internet connectivity.

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