Chancellor George Osborne delivered what he described as a ‘budget for the makers, the doers, and the savers’ this week with measures designed to boost manufacturing and export.
Industry is at the heart of economic recovery he told the House of Commons, “We’re not going to have a secure economic future if Britain doesn’t earn its way in the world,” he said.
“We need our businesses to export more, build more, invest more and manufacture more.”
A £7 billion package to reduce energy bills for industry was unveiled. A mid-sized manufacturer would save £50,000 on its annual energy bill, Osborne claimed, as the Carbon Price Support rate was capped at £18 per tonne of CO2.
Compensation for energy-intensive industries such as vehicle manufacturing plants was also extended for a further four years up to 2020. This sector accounts for 35% of exports, Osborne said.
Finance for businesses looking to export was doubled to £3 billion a year and the interest on this finance was cut by a third in a move which the Chancellor said took the UK from having the least competitive export finance in Europe to the most competitive.
Annual investment allowances for was also doubled to £500,000 – enough to provide 99.8% of business with 100% relief said Osborne.
Research and development tax credit for small loss-making business 11 to 14.5%.
Enterprise zones were flourishing, he said, so the business rate discounts and enhanced capital allowances on offer are to be extended for another three years.
There was also a boost for businesses considering taking on apprentices as £85 million for 100,000 grants a year will be provided. A further £20 million over two years for new degree-level apprenticeships was also announced.
The planned fuel duty rise due this September will also not take place, while Osborne said local authorities could also bid for extra funding to fix roads with a further £200 million to be made available in emergency relief.
The Confederation of British Industry
“The budget will put wind in the sails of business investment, especially for manufacturers.
“This was a make or break budget coming at a critical time in the recovery and the Chancellor has focussed his firepower on areas that have the potential to lock in growth.
“It’s encouraging to see higher than expected growth in the short-term, but as the Chancellor recognised, tough challenges remain ahead, so it’s right that the budget reflected the fiscal reality.
“The economy needs to rebalance and this budget will help businesses hungry to invest and export.
“The doubling of the direct lending scheme and the cutting of its interest rates should strengthen the UK export finance armoury. The Government must now work much harder to promote these schemes, since many fast-growing firms are unaware of the support available.”
The Federation of Small Businesses
The Federation of Small Businesses (FSB) welcomed the budget believing it shows progress on economic recovery and maintains the momentum for growth aspirations.
John Allan, FSB National Chairman, said, “Today’s budget offered a clear signal for businesses to grow through the increased investment allowance, and with a focus on manufacturing. The £7 billion package to cut manufacturing energy bills will help create jobs and strengthen this key sector.
“That said all small businesses need to be bold and brave in 2014. We know more than half of our members have aspirations to grow with many wanting to recruit and pay more too. The Chancellor set the pace towards some progress but there is still more to be done to get the economy and public finances back on track.
“Recent FSB research showed that only two per cent of members knew about the export finance increase to £250,000 – meaning most firms hadn’t taken advantage of it. This change should encourage greater investment, and key for Government now is to increase communication about the allowance to encourage take-up.”
Freight Transport Association
The Freight Transport Association welcomed the freeze in fuel duty but was disappointed a three pence per litre cut was not provided.
James Hookham, FTA’s Managing Director of Policy and Communications said, “The Chancellor has kept his promise to freeze fuel duty and industry will be £187 million a year better off for that, but he missed the opportunity to stimulate the economy further by reducing fuel duty and putting around £690 million into the pockets of families and British business. This could have given a further stimulus to the economy and locked in the positive growth already achieved.”
The FTA says reducing road fuel duty would ease cost pressure on businesses operating commercial vehicles and stimulate economic growth.
It says a three pence cut would have saved around £350 million a year for an industry that all British businesses rely upon.
Road Haulage Association
The UK road freight industry seems to have been largely forgotten, says the RHA.
Chief Executive Geoff Dunning said, “While proving positive for the manufacturing and export sectors, today’s budget brought little encouragement for UK hauliers.
“We welcome the news that business rates, discounts and enhanced capital allowances will be extended in enterprise zones for another three years.
“However, for the UK haulier, currently paying the highest level of fuel duty in Europe, there was scant encouragement. We were buoyed up at the pre-budget announcement that the Chancellor had some ‘surprises’ up his sleeve.
“Sadly, they did not include a cut in fuel duty – the thing that our industry so desperately needs.”
Society of Motor Manufacturers and Traders
The budget was welcomed by the Society of Motor Manufacturers and Traders as being in line with the sector’s needs, but it said business rates still needed to be reviewed.
SMMT Chief Executive Mike Hawes said, “The Chancellor’s focus on investment, exports and skills, as well as reducing energy costs for manufacturing, is welcomed by the automotive industry.
“Extending and doubling the Annual Investment Allowance and improving export finance are important signals to encourage the UK’s manufacturing base, helping trigger greater business investment and enhancing our export capability.
“In line with welcome reductions in energy costs, we ask government to look at business rates to ensure the system works for manufacturing and maintain our global competitiveness.”