A mixed response to UK budgetDate:
03/16/2023Tag: #psd #policy A mixed response to UK budget Wednesday was budget day for the UK. That is the occasion when the Chancellor of the Exchequer lays out the funding priorities for the next year on behalf of the government. It is a big day for both individuals and companies and forms the basis for financial plans. This year was no different, one of the big priorities seemed to be bringing people back into the workforce. A number of policies were announced to do just that, including introducing a new voluntary employment scheme for disabled people, a scheme to offer mental and physical health support for workers with health problems, and providing parents of children aged nine months to three years with 30 hours a week of free childcare in term time.
For business in general, he announced that corporate taxes will rise to 25%, a £9bn policy that will allow businesses to write off investment against taxes, an enhanced credit intended for research-intensive businesses, and a £1m a year prize for innovative AI research. In the energy sector, he announced £20bn of investment in carbon capture and storage, he also changed the designation of nuclear power to environmentally sustainable to give it access to investment incentives, and finally he announced a competition for the design of small modular reactors.
The reaction to the budget from the engineering industry was quite mixed. I’ve collated some of the comments that I have received below,
Beatrice Barleon, Head of Policy & Public Affairs at EngineeringUK: “We welcome the Government’s ongoing commitment to make the UK a science and technology superpower and the ambitions of growing the economy, meeting our Net Zero targets, and unlocking the potential of every region. We also welcome the acknowledgement that to achieve this, businesses, including engineering and technology businesses, urgently need a larger skills and workforce base, now and in the future. However, the measures on childcare as well as the focus on those over 50 will not, on their own, solve the wider skills and workforce shortages in the engineering and technology sector in the long-term. We urgently need greater investment in and focus on STEM education, STEM teachers, careers provision and vocational pathways for young people.”
Stephen Phipson, Chief Executive of Make UK, said: “Given the limited headroom the Chancellor had, his pursuit of continued stability and reassurance is understandable. Within this he was right to focus on significant measures to boost investment and the welcome support for childcare. Companies will be disappointed, however, that there is no extension of support for energy with the rapidly approaching cliff edge of the current scheme ending, while the planned changes to R&D tax credits remain and will be unwelcome for SMEs in particular as they are implemented in April. Looking forward, given the bigger picture at play and, in the face of the firepower that the US and EU are bringing to bear with their huge incentive programmes to bolster onshore manufacturing, the UK needs transformational reforms that look to the long term, with the aim of equipping businesses and individuals for the scale and pace of the challenge we are facing.”
Verity Davidge, Director of Policy, Make UK said: “While the Chancellor set out big and ambitious plans for AI and quantum, the focus on diffusion and adoption of digital adoption overall is lacking. R&D tax credit policy keeps chopping and changing and many businesses will struggle to keep up. Large swathes of small and medium sized manufacturers will find themselves out of pocket when the new changes come in in April this year and we were looking to the Chancellor to delay, or even better, reverse these changes to boost R&D across all of manufacturing.”
Rob Driscoll, Director of Legal and Business, Electrical Contractors Association said: “Today’s corporation tax hikes come at a time when SMEs have dealt with Covid, hyperinflating labour, materials and energy costs, rising insolvencies, receding demand and increased borrowing costs. Today’s budget may prove to be counter-intuitive and hinder businesses’ ability to pivot into delivering our urgent Net Zero targets. The drive to Net Zero hinges on skilled engineering services professionals doing the frontline work to upgrade our grid, electrify transport and heating, and connect our homes and businesses to clean energy sources.”
Mark Yeeles, VP Industrial Automation UK & Ireland, Schneider Electric said: “The Chancellor’s spring budget presents a mixed bag for UK industry. While the full expensing measures are a good step towards encouraging the investment that is vital for our sector to become more efficient and productive, the imminent end to energy cost support presents an existential threat to many businesses in our sector and the reduction of R&D tax credits will dampen innovation. There is cause for cautious optimism in the Chancellor’s reference to “industrial strategy” but there is little evidence yet of a sustained, strategic approach to incentivise the digital transformation of UK industry that is required.
While measures such as the new AI sandbox, and support for the carbon capture industry shows support for sectors with big growth potential, this budget is another lost opportunity to offer UK industrial enterprises the breadth and depth of strategic support required for the transformational change needed to reverse flagging productivity and unleash the UK’s undoubted potential to compete on the world stage. Set against the huge support packages announced recently by the EU and the US and without further measures in the near-term, UK industry as a whole may fall further behind.
More positive are the measures to improve the provision of accessible and affordable childcare and retraining, which are both important steps in the right direction for the skills and equality challenges faced by UK industry and as such are very welcome. It is essential that we strive for an inclusive work environment which enables those with childcare responsibilities to remain in or re-enter the workforce, and imperative that we enable the upskilling of the workforce to meet the needs of the workplace of today and into the future. “ |