Autumn Budget 2023: Here’s what manufacturing experts think
24 November 2023
Announced on 22 November, the Autumn Budget introduced a set of strategic measures targeting the manufacturing industry, including investment zones, skills development, AI innovation, and targeted funding for key industries. Here, DPA’s Editor Sophia Bell breaks down the reactions of industry leaders to these announcements.
Before the full statement was disclosed, Hunt announced a £4.5 billion investment plan for the manufacturing sector, which is set to span five years, commencing in 2025.
Targeting eight key growth sectors in the UK, including automotive, aerospace and life sciences, it will infuse manufacturers with “the confidence to invest in innovation, productivity and sustainability”, according to Brian Holliday, Managing Director of Siemens Digital Industries UK, and Co-Chair of Made Smarter.
“This is a significant amount of money, and it shows the world the UK is open for business, and ready to innovate across manufacturing sectors,” added.
However, Professor Matt Boyle OBE, Executive Chair of DER-IC (Driving the Electric Revolution Industrialisation Centres), whilst welcoming the news, has also called on the Government to produce a comprehensive industrial strategy to maximise the impact of the funding. “We’re an industry that’s pivotal to both the growth of our economy and transitioning to a net zero society – but we need the vision to go with it,” he said.
This is a sentiment echoed by Chris Barlow, Partner at MHA: “How and when these funds will be delivered are key questions that must be addressed, particularly with next year’s likely change in [the] Government. As it stands, many will remain sceptical about whether the new investment will reach the sector in time.
“The Government cannot keep providing short-term solutions in an attempt to distract from the glaring lack of long-term vision.”
Professor Boyle further stressed the need for SMEs in the manufacturing supply chain to access these funds sooner, given the current economic challenges.
Concerns have also been raised about sectors being excluded from the investment. Victoria Brocklesby, COO at Origin, emphasised that businesses outside the automotive, aerospace, life sciences, or green industries might not benefit from these targeted initiatives.
“The keyword is 'targeted',” Brocklesby said. She also added that small to medium-sized businesses will be excluded. “With the super deduction, it will only benefit large businesses. But as a nation with a long history of manufacturing, many of our greatest manufacturing businesses do not fall into that category.”
Investment Zones extension: A boost for long-term investment
A notable highlight is the extension of the Investment Zones programme from five to ten years. This move, doubling the funding and tax reliefs available, has resonated positively within the manufacturing community.
The UK Government's Autumn Budget announced a significant expansion and extension of the Investment Zones program. The programme, initially set at five years, will now span a decade, doubling the funding and tax reliefs available in each Investment Zone.
It will also be expanded to include the key regions of Greater Manchester, the West Midlands and the East Midlands, as well as Wrexham and Flintshire.
To ensure flexibility and responsiveness to emerging investment opportunities, a £150 million Investment Opportunity Fund has also been introduced, available over the next five years. According to Hunt, this move is anticipated to leverage £383 million in private investment and generate 4,200 jobs over the next decade.
James Brougham, Senior Economist of MAKE UK, reacted positively to the announcement, saying, “The Chancellor has listened to concerns held by industry that the previous five-year time frame for fiscal incentives in Investment Zones will be too short to maximise investment potential […] the sector will be assured that the Government is committed to a longer-term plan to boost investment.”
Skills and apprenticeships: Addressing critical skill gaps
In addition to Innovation Zones, the Chancellor has also announced a £50 million investment over the next two years to increase apprenticeships in engineering and other “key growth sectors where there are shortages”.
Bekki Phillips, Chief Operating Officer of In-Comm Training, commented, “After decades of being in the shadows of universities, it was refreshing to see vocational learning play such a prominent role.
“It was also pleasing to see an increase in wages for apprentices for their first year of training,” Phillips said, adding that it will challenge the traditional perspective of apprentices as “cheap labour” and instead allow them to be regarded as “valued members of the workforce”.
Stephanie Baxter, IET Head of Policy, added: “It is very welcome that the Government has recognised the importance of engineering apprenticeships to filling critical skill gaps.”
However, noting that 21 percent of manufacturers report skill shortages in adapting to new equipment, Baxter also stressed that more needs to be done to allow for upskilling and reskilling. This will allow for a workforce that is “agile and adaptive to new technologies such as AI and digital twins”.
“The Institution of Engineering and Technology is therefore calling on the Government to allow employers to use unspent levy funding to provide short, tailored courses (micro-credentials) in cutting-edge technologies,” she said.
EngineeringUK also pointed out where it believes the Autumn Statement falls short, saying it does “little to address widespread issues in the skills systems”. Whilst welcoming the £50 million investment, EngineeringUK stressed that “we need large scale investment […] to ensure that the country has the engineering and technology workforce it needs for the future. We urge the government to take a bolder approach.”
Summing up, Karen McLellan, Financial Director of iconsys, concluded: “Whereas the announcement is welcome, the amount dedicated to it seems a drop in the ocean of what is needed in the long-term to secure future talent acquisition.”
Determined to solidify the UK's position as a leader in artificial intelligence (AI), the Treasury has allocated £500 million for the next two years to accelerate AI development, following the recent AI Safety Summit.
“We know that AI will be at the heart of any future growth. I want to make sure our universities, scientists and startups can access the computing power they need,” Hunt stated.
Building upon the £900 million commitment announced in the Spring Statement, this additional funding will bring the overall planned investment to over £1.5 billion.
Claire Trachet, CEO and Founder of business advisory, Trachet, said that this will allow tech firms to “bring cutting-edge products to market faster and ensure that Britain doesn’t lose its spot as a leader in Europe for this sector”.
Overall, the reaction of the manufacturing industry to the newly announced Autumn Statement has been largely positive. “Each of these measures will be welcomed by UK industry and could help the UK to fulfil its potential as a world leader for the technologies, skills and applications of the new energy landscape, while promoting the digitally driven decarbonisation that is vital to making the world more sustainable,” concluded Kristin Baker, VP Industrial & Process Automation UK & Ireland at Schneider Electric.
However, while the Autumn Budget has provided a welcome boost to the manufacturing sector, it is clear that a well-defined and inclusive industrial strategy will need to be implemented in order to maximise the impact of the announced measures.
As the sector prepares to leverage the funding and support, the Government's responsiveness to industry feedback and its ability to address concerns will play a crucial role in shaping the future trajectory of UK manufacturing.