Manufacturing Autumn Statement 2015 review
On 25 November, the Chancellor delivered his latest Autumn Statement. In a year which has already seen two Budgets – which have both brought challenges and opportunities to the manufacturing sector – manufacturers were perhaps understandably tentative, yet optimistic, about what this year’s Autumn Statement might bring.
In this article we summarise the key points arising from the Autumn Statement and focus specifically on what the changes may mean for the manufacturing sector.
In summary (general):
- Tax credit cuts scrapped all together
- £12bn in targeted welfare savings to be delivered in full
- Small business rate relief to be extended for one more year
- NHS to receive £10bn more funding a year in real terms by 2020
- Basic state pension will rise by £3.35 to £119.30 a week
- New 3% surcharge on stamp duty for buy-to-let properties and second homes from April 2016
- Doubling of housing budget to £2bn a year
- Capital funding of transport projects to rise by 50%
- Increased devolution with 26 new or expanded Enterprise Zones announced
- Transport (37%), environment (15%) and energy (22%) departments all face funding cuts
- Apprenticeship levy for small businesses
- The 3% supplement on benefit in kind % for diesel cars to remain for a further 5 years
- The protected budget for scientific developments
- Energy-intensive industries to be exempt from environmental tariffs
- Significant investments in UK transport links
- Extension of the small business rate relief
Overall – not too much change for manufacturing
Chris Hill, Partner at Hawsons, commented: “In this year’s Autumn Statement the Chancellor spent the majority of his speech reviewing spending and where future government funding would (or would not) be allocated. It is difficult to review the impact on the manufacturing sector as much of the Chancellor’s speech was devoted to spending, not taxes. Having said that, there are a few key changes that will impact manufacturers.”
“British manufacturing has a long heritage of first-class innovation and design, so the Chancellors move to protect science and research funding (in real terms) will give the sector the much needed confidence to continue innovating.”
“The Autumn Statement also brought good news for smaller manufacturers, with the extension of the business rate relief for small businesses and the apprenticeship levy, which 98% of businesses will now not pay. Larger business will of course be disappointed with that announcement, but with the sector facing a looming skills crisis it is critically important to focus on training new apprentices. Moves to create more skilled workers will boost the manufacturing sector, and is much needed.”
Good news on energy
We have only just published on article on the decline of the British steel sector – calling for urgent government support – and there will be tentative optimism for steelmakers following the Chancellor’s announcement on energy. UK steelmakers have been paying almost twice as much for electricity as their EU counterparts, so this change will be very welcome.
The Chancellor said: “We are going to permanently exempt our Energy Intensive Industries like steel and chemicals from the cost of environmental tariffs, so we keep their bills down, keep them competitive and keep them here.”
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