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Spending Review must match growth rhetoric by making hard choices: EEF

03 June 2013

The EEF says the government must use this month’s Spending Review to send a clear signal to business that it is getting behind the areas that matter most to growth.

EEF chief executive, Terry Scuoler
EEF chief executive, Terry Scuoler

With further reductions in overall spending planned, it is critical that the government prioritises key growth areas such as skills, innovation, exports and infrastructure. The Engineering Employers' Federation (EEF) believes that the government’s approach of protecting large sections of its spending is unnecessarily obstructing the switch towards growth-enhancing spending. It is therefore calling on government to end the ring-fencing of the health budget.

EEF chief executive, Terry Scuoler says that with government increasingly relying on business to drive growth, this month’s Spending Review must prioritise the actions to help to deliver it.

"This means getting behind the firms which are innovating and investing in skills and which will deliver the exports to meet the UK’s £1 trillion target," he urges. "We also need to see a step change in investment in our transport system, particularly in our over-stretched road network.

“However, the government is making the shift towards growth-enhancing spending unnecessarily difficult by protecting large areas of spending. The time is now ripe to abandon the ring-fence for health spending.”

Key priorities for EEF include:
- improving support for applied research by putting science and innovation spending together in a combined ring-fence
- supporting employers that are investing in apprenticeships by resting moves to push the cost of apprenticeships for 16-18 year olds or lower level skills on to employers 
- building on the recent efforts to transform our export performance by protecting recent increases in funding for UKTI
- prioritising investment in our road network, prioritising projects in the Infrastructure Pipeline that don’t have funding or addressing the backlog in local road maintenance 

The Spending Review must also take action to address the growing concerns over rising energy prices, not just for energy-intensive industries but for a growing band of manufacturers, facing costs that are out of line with their competitors. Mr Scuoler again:

“With rising energy prices affecting more manufacturers, the government needs to rethink its unilateral tax on energy through the Carbon Price Floor. It must also make a longer-term commitment to compensate energy intensive firms, who have long investment cycles and who can see rising electricity prices continually increasing over the coming decades.”

The EEF makes the following key recommendations:
1. A significant proportion of the annual £3bn capital spending, committed from 2015 at the 2013 Budget, and any additional expenditure or reprioritisation, should be targeted at road projects that would give the economy a significant and timely boost
2. The Technology Strategy Board (TSB) and its budget should be moved into the science ring-fence to create a “science and innovation” pot of approximately £5bn at current levels of funding
3. The High Value Manufacturing (HVM) Catapult’s annual operational funding should be increased from £30m to £60m
4. Apprenticeship funding within the Adult Skills Budget, as well as the Department for Education (DfE) budget for Apprenticeships for 16 to 18 year olds, should be protected
5. Training for adult learners (19+) to achieve basic English and maths must continue to be funded by the government, and this cost should not fall onto the employer. The government should not extend the loans model to either level 2 apprenticeships or to those entering apprenticeships as 16 to 18 year olds, which currently receive 100% funding
6. The government must back UKTI with the long-term funding required to send a clear signal to business that it will deliver a high quality export support service 
7. The government should scrap the Carbon Price Support scheme at this Spending Review in order to align efforts and costs in the UK with our European competitors. At the very least, government should rethink its current linear cost accelerator aimed at achieving a price of £30 per tonne of carbon dioxide by 2030. 
8. The Spending Review must make a commitment to extending all the measures in the current Energy Intensive Industry Package to 2020/21
9. The commitment to devolve growth-related spending from April 2015 should be contingent on a positive assessment of LEPs’ readiness by the National Audit Office in the financial year 2014/15.

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