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Budget gets a cautious thumbs-up from industry

19 March 2015

We've gathered some comments from industry and industry observers about the budget and what impact it may or may not have on UK PLC.

Surface Generation, an SME composite manufacturer based in Leicestershire employing 30 people, says that Wednesday’s Budget has done nothing to address the biggest issue facing businesses – the lack of skills in the UK workforce.

The company welcomes the announcement that this April the government will abolish National Insurance for employing under 21 year-olds and that next April it will abolish it for employing young apprentices, which it feels will encourage more employers to hire young trainees. But where are the measures to promote STEM subjects within schools and, in the short-term, to make it easier to recruit qualified staff – especially engineers and scientists – from outside the EU?

Surface Generation has just secured £3.1 million of new investment to help maintain its growth; however, according to chief executive, Ben Halford, the biggest challenge his and many other businesses face is recruiting quality, skilled staff. 

"Two years ago we had 20 staff and now we have 30 employees and are looking to increase this to 40," says Mr Halford.  "However, there are not enough skilled engineers in the UK and now 15% of our workforce is made up of people from other countries.  The government should relax immigration laws to make it easier to hire the right staff from outside of the EU irrespective of election pressures.

“Every year, the UK faces a shortfall of over 81,000 people with engineering skills in the workforce and this is threatening the country’s economic recovery.  This budget’s tax breaks are paid for by exports.  The country needs to double the number of entrants into engineering across all levels of qualification, but in the short-term it must be made easier for employers to recruit from outside of the EU.”

Mark Morley, director of manufacturing at software company, OpenText, says the government’s commitment to rolling out ultra-fast broadband and elevating the UK to become a global leader in adopting Internet of Things (IoT) based technologies go hand-in-hand, but to deploy IoT based technologies, you first need a high speed network to connect devices (a subject highlighted in the Institution of Engineering and Technology's 'General Election Campaign').

"Ultra-fast broadband will not only benefit domestic households, but will significantly help small businesses," says Mr Morley. "The manufacturing industry will certainly benefit; for example, suppliers who require a high speed network connection with their customers can ensure that they remain competitive in the market.

"The ability to exchange large files such as engineering design information, multi–media files and even procurement related information in a much faster way will help smaller UK suppliers to be more responsive to their customer requirements alongside exploring new business opportunities in other parts of the world. 

"Government backing of IoT projects will position the UK as a leading adopter of this type of technology. Creating a completely connected economy – from connected power utilities, connected transport infrastructures to connected industrial equipment – will accelerate the growth of the British economy. 

"Across the supply chain, greater connectivity both in terms of improved network speed and having more connected devices across the supply chain will improve end-to-end visibility of shipments from one end of the UK to the other and beyond."

Justin O’Hagan, a tax partner at PwC, believes the Budget wasn't a radical one for UK industry, albeit that there was some welcome news with the announcement of a review of Business Rates.

"This [review of Business Rates] had been seen as long overdue by many," says Mr O'Hagan. "The abolition of National Insurance for under-21s and young apprentices is a welcome development for employers and we expect this to create more jobs in industry for young people. 

“The focus on a Northern Powerhouse and improved transport links are really positive for regional industry, as are specific investment in research and export and the ten new Enterprise Zones. 

“The commitment to making R&D credits effective for small businesses and clarifying the scope of what qualifies is particularly welcome for the aerospace, defence and security sectors where R&D is such a significant part of what they do.”

Philippa Oldham, head of transport and manufacturing at the Institution of Mechanical Engineers, saw some welcome investment announcements in the Budget, including the £60 million earmarked for a new Energy Research Accelerator in the Midlands and the £138 million investment towards a UK centre for research into infrastructure and cities.

"These investments will hopefully help spur innovation and enable more joined-up cross sectorial thinking when developing new city infrastructure," she says, adding: “The £100 million investment into Research and Development for intelligent mobility is also welcome news.

"Autonomous vehicles have the potential to make driving safer, greener and more efficient, and could help boost the UK’s vital car manufacturing sector. But Government must now work hard to convince the public of the benefits of these technologies – a poll by the Institution of Mechanical Engineers last year found that over half of the public would not use a driverless car.”

Terry Scuoler, chief executive of the Engineering Employers' Federation (EEF) says the Chancellor gets "three cheers" from manufacturers for the measures he included to boost exporters. "His decision to bring forward compensation for industries facing vast and uncompetitive energy costs, such as steel makers, is also welcome but the full package needs to be put in place as soon as possible," says Mr Scuolar. "In addition he has committed to a stable and competitive tax regime, which we wholeheartedly support.”

Paul Raynes, director of policy at the EEF concurs. “Boosting the UK’s export performance is a national priority and the Chancellor is right to keep the pressure on by providing additional resources to support exporters in overseas markets," he says. "This is another step in a longer journey to meet the government’s £1 trillion export ambitions and help cement a more balanced economic recovery.”

“We live, work and compete in a global innovation economy and public sector investment is critical in building the confidence needed to take on exciting new opportunities," says Innovate UK director of technology, Kevin Baughan. "The £200m support for intelligent mobility is a great example of this, as is the £40m investment in the Internet of Things and the support for agri-tech industry. It is critical that we continue to help businesses get a head start in the industries of the future, creating UK economic growth.

“The Chancellor also had good news for our Catapult centres, which help businesses, scientists and engineers work together to transform ideas into commercially viable products and services. Birmingham will be home to our new Energy Systems Catapult, and there will also be additional funding for the Centre for Process Innovation, which is part of our High Value Manufacturing Catapult, to improve knowledge transfer and collaboration in the chemicals industry.”

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