Automotive industry calls for investment and growth action in Autumn Statement to boost UK competitiveness

25 November 2011 #SMMT News

“Action to build the competitiveness of UK plc through private sector investment will be key to delivering economic growth,” said Paul Everitt, SMMT Chief Executive, ahead of the government’s Autumn Statement on 29 November.

In a letter to the Chancellor, SMMT has called on government to use next week’s Statement to deliver tangible changes to unlock private sector investment and support export-led growth. These include:

  • R&D tax credit reform – Reform to make the R&D tax relief ‘above the line’ would generate more investment and jobs, make the incentive more visible and allow the UK to compete more effectively with overseas competitors.
  • Capital allowances – Allowances for capital spending in the UK are now among the lowest in the G20. To grow and develop the domestic supply chain, government must help small and medium enterprises (SMEs) to invest now in plants, machinery and retooling.
  • Skills – Skills are vital for productive and globally competitive suppliers. Flexible government support is needed to deliver up-skilling of the existing workforce and support for advanced apprenticeships.
  • Business rates – The competition for investment and new model development with sister plants is intense for UK manufacturers. Current business rates for manufacturing sites are not internationally competitive, risking global investors favouring other countries in Europe and around the world in a drive to reduce cost per car.
  • Access to affordable finance – Without the ability to obtain competitive finance and credit, businesses across the UK – particularly SMEs – are unable to invest and grow. The government’s credit easing plan has to be well targeted to the needs of the businesses it is trying to support.

“Next week’s Autumn Statement will be crucial in determining the rate of UK economic recovery and the future decisions of global automotive companies and their supply chains,” said Paul Everitt. “The Chancellor must take this opportunity to position the UK as a prime location for manufacturing and incentivise private sector investment in R&D, skills and capital equipment. We have an opportunity to speed up the re-balancing of the economy and to generate new high value employment.”

SMMT’s submission drew attention to this year’s unprecedented levels of international investment in UK automotive, with global companies committing over £3.9bn so far this year to long-term manufacturing operations in the UK, announcing new jobs and building new facilities. It is this level of momentum that industry wants government to maintain by acting decisively and demonstrating that the UK is a prime site for private sector investment and a location where SMEs can grow. Government’s current policy to reduce capital allowances should be reversed to support investment, maximising value added from new product development and investment in skills.

UK-based automotive companies already invest more than £1.5bn each year in R&D. This fact, coupled with a world-class skills base, has made the UK a leader in the development of low and ultra-low carbon technologies. Building on this pedigree, industry chiefs focused their demands on reforming the large company scheme for R&D tax relief. SMMT is calling for an ‘above the line’ credit to make the UK scheme internationally competitive and more effective in attracting a greater share of global R&D investment.

In addition to stressing the importance of consistent support for low carbon manufacturing, the continuation of the Plug-In Car Grant, ongoing development of skills and better access to finance and credit, SMMT also raised business rates as an important consideration for the Chancellor. Through the SMMT, automotive manufacturers voiced concerns that UK business rates for manufacturing sites are significantly higher than the equivalent in markets like Germany, risking investment going to other group sites in Europe.


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