The Autumn Budget has been announced - outlining the governments plans for spending and taxes in public services, industry healthcare and education.
Chancellor Rachel Reeves says that the Budget will raise taxes by £40bn - a statistic many sources had predicted. She also said that the rate of inflation will be forecasted at 2.5% this year, and 2.6% next year and confirms hikes in Capital Gains Tax.
Most notably, Reeves pledges research funding for engineering, biotechnology and medical science sectors - which will include £6.1bn to protect core research into these areas.
The controversial mineworkers' pension scheme arrangement, which saw the government receive hundreds of millions of pounds from mineworkers pension schemes has been scrapped.
In addition, National Minimum Wage is expected to rise from £11.44 an hour to £12.21 from April 2025. National Insurance is to rise 15% for employers with Reeves saying that the hike won't affect "working people."
The Labour Government has been notifying the country over the past couple of weeks of "difficult decisions" and to "embrace harsh light of [the] fiscal reality," to prevent austerity, according to PM Keir Starmer. Reeves has claimed that the measures placed will restore "economic instability" caused by the Conservative leadership.
The previous budget last year by the Conservative Party saw the announcement of a 2p cut to National Insurance, a new tax on vaping and increase to the salary threshold for claiming child benefit.
With the new Budget now established - what has the manufacturing industry had to say about this?
Paul Noble, CEO of Chetwood Bank (formerly Chetwood Financial), said that: "This was the most eagerly anticipated Budget in years. The arrival of the first Labour government in 14 years, coupled with the warnings of a ‘financial blackhole’ that needs filling, certainly added to the usual pre-Budget speculation, and the announcement itself covered a lot of ground.
"Some obvious watchwords emerged, such as growth and stability, reflecting that the Chancellor was walking a tightrope between putting public finances on a healthier footing and the need to manage the impact on personal finances, while still investing in opportunities for economic growth.
"Such was the breadth of policies unveiled, it will take time to fully assess the implications of this Budget. After all, each individual will be affected differently based on their earnings, lifestyle and tax commitments, so it is important to avoid over-generalising fiscal statements such as being ‘good’ or ‘bad’.
"Rather, the onus is on banks and financial services firms to provide support for consumers so they can better understand policy shifts and economic changes, ensuring they can then adapt their own financial plans accordingly."
He continued: “The property market was certainly a major focus of the Chancellor's speech. With planning reforms and housebuilding promises, the Budget reaffirmed Labour's manifesto pledge to tackle the UK's housing shortage. But those are long-term strategies – in the here and now, it is the reforms to Capital Gains Tax (CGT), Stamp Duty and Inheritance Tax that will impact the market, forcing landlords and property investors to consider their plans, particularly with the Renters Reform Bill and new EPC rules already on the table.
“The mortgage industry must move quickly to adapt in line with these changes. For specialist lenders, the focus must be on supporting landlords and investors who may now want to change their business model. No doubt some landlords will alter their long-term plans in light of the tax reforms, while others will be concerned with the impact of the increase in the rates of CGT and the higher SDLT surcharge for second homes.
“It will take some time for the dust to settle from today's Budget. But now more than ever, lenders have to combine the right products with exceptional client support. This, in turn, will allow all manner of property buyers, as well as existing property owners, to make informed decisions and execute their own plans with confidence.”
Mitchell Barnes, CEO of RYSE 3D said: “It’s a budget that unfortunately I think we were all expecting and has done little to reassure businesses that Labour understands what the economy is all about.
“We’re a high-tech company, who export globally and have created 25 jobs – we should be the poster boy for what ‘growth’ looks like, yet I find myself this afternoon questioning whether the Government actually wants firms like RYSE 3D based here.
“There’s no question we will succeed, and we will grow, but it will be despite policy, tax rises and worker reforms, which will shackle employers and force us to consider investment and recruitment decisions going forward.
“The ‘working person’ line really infuriates too. Like so many entrepreneurs across the country, I work probably 70-hours plus per week looking to grow the company and create employment for people in places I call home. It’s bloody hard work, but I want us to be a company that is the best in the world, so I find it ridiculous that you are punished for being aspirational.
“The Capital Gains Tax increase will simply turn future entrepreneurs off, there is no question about that. Where is the incentive to take risk, where is the incentive to put so many hours into growing something, where is the incentive for growth Mr Starmer?”
Ian Jones, CEO of WKE, said: “As an alternative fuels manufacturer, we’re disappointed by the government’s lack of targeted support for our sector in this Budget. While Labour's focus on decarbonisation through the National Wealth Fund is promising, much more is needed at the industry level to ensure a practical and achievable energy transition – especially for heavy industries like power generation and steel.
“This Budget needed to address immediate energy security, not just far-flung efforts to tackle long-term energy challenges. We need a collective policy that engages with a diverse range of energy sources – including alternative fuels. Many of these are homegrown, available now and will reduce the UK’s reliance on imported energy and fossil fuels from the get-go.
“Raising employers' national insurance seems counterintuitive to the government’s stated aim of fostering investment and economic growth. This alone could hinder investment, growth and job creation at a critical time.
“Labour had the chance to position our industry as an economic driver and part of the UK’s decarbonisation solution. Instead, we’re left facing the same uncertainties.”
Stephen Phipson, Chief Executive of Make UK, said: “This budget was always going to involve tough choices for business as the Chancellor grapples with the state of the nation’s finances whilst, at the same time, improving the foundations of the economy. However, there is no escaping the fact that raising Employer National Insurance contributions and, the surprising change in thresholds, at a time of other cumulative increases in employment costs will be challenging for many businesses and especially SMEs.”
“However, looking at the bigger picture and, the medium to long-term, we welcome the Governments clear path to growth for manufacturing with a number of positive measures. In particular, the commitment to an Industrial Strategy, the Corporate Tax Road Map and, continued support for vital programmes such as Made Smarter, are key elements of a growth plan which will enable UK manufacturing to make significant progress over the coming years.”
On the rise in Employers’ National Insurance Contributions, Verity Davidge, Make UK Director of Policy, said: “This is a substantial increase in employers’ costs and will cause many to think twice about recruiting, make pay increases for employees much less likely and, inevitably lead to some job losses for working people.
“The rising costs associated with the National Living Wage, apprenticeship levy and other policies over recent years already risks hampering manufacturers’ investment in their workforce. This cumulative increase will send employers’ costs soaring.”
On Industrial Strategy, Stephen Phipson, said: “The UK has long been an outlier in not having a industrial strategy at the heart of its economy. There can be no doubt that advanced manufacturing now has a critical part to play in driving growth across all regions of the UK. The commitment to a long-term industrial strategy by this government is to be celebrated. It will deliver growth, investment and high-quality jobs.”
“After the announcement of the Industry Strategy Council, Government now needs to move at pace to formalise the creation of the individual sector groups so that the formal strategy and more detailed plans can be brought forward.”
On the Corporate Tax Roadmap, Fhaheen Khan, Senior Economist, said: “Certainty and predictability are the bedrock on which investment decisions are made. This is why the Government’s commitment to corporation tax policy will be a great comfort to many businesses who have seen the tax burdens they shoulder grow heavier.
“By backing support for investment and innovation, R&D will be at the centre of propelling UK industry forward and will encourage businesses to proceed with productivity enhancing projects with greater confidence. It is imperative we continue to maintain a fine balance between existing tax burdens and the relief for good decision-making creating opportunity in the high growth areas of industry, such as automotive, aerospace and life sciences. Manufacturers now proceed confidently knowing the mission for growth is a clear and achievable objective.”
On Made Smarter, Nina Gryf, Make UK Digitalisation lead said: “Made Smarter has been championed by Make UK and industry for seven years and is the only programme proven to be effective in helping smaller manufacturing businesses boost productivity by successfully adopting digital technologies. Today’s announcement that the programme’s funding is being protected is good news for Britain’s manufacturers, helping ensure the sector can continue to lead the way globally. “
“The programme helps companies choose the most effective digital technologies for their individual needs. Without it, thousands of SMEs would have been unable to take those first important steps towards automation as the wider landscape of support for industrial digitalisation is fragmented and difficult for manufacturers to navigate.”
Kelly Becker, President, Schneider Electric UK and Ireland, Belgium and Netherlands: "The Government has made good progress to support UK business and manufacturing. Schneider Electric welcomes the commitments to deliver an Industrial Strategy and the Budget's commitments to maintaining funding for the Industrial Energy Transformation Fund, the Public Sector Decarbonisation Scheme, and Made Smarter. We also welcome clarity on the future tax landscape, including a cap on Corporation Tax at 25% for this Parliament and retention of full expensing as well as a commitment to explore extending it to leased assets when fiscal conditions allow. These measures will support manufacturers and wider business to continue to invest in the UK."
"However, we would have liked to see commitments to supporting the manufacturing supply chain that will play a key role in delivering the industrial and green growth ambitions set by the Government. Whilst we welcome the support for residential and public sector building decarbonisation, the UK also needs a clear roadmap for decarbonising the commercial and industrial sectors."
"Finally, at a time when UK manufacturers are struggling to hire skilled workers and compete with the EU and the US, we need measures that will support business and economic growth. We question how increasing the cost of employment is aligned with the government’s mission to grow the economy and deliver prosperity."
Beatrice Barleon, Head of Policy and Public Affairs, EngineeringUK, responds to the Autumn Budget: "We welcome the Chancellor’s commitment to invest in education and skills as a central pillar of the Government’s growth agenda, not least through the creation of Skills England and the announcement of a £40 million pot to develop new foundation and shorter apprenticeships in key sectors. We look forward to continuing to support the Government to develop a new Growth and Skills Levy, ensuring an apprenticeships system that provides ample routes into engineering and technology careers for young people.
The pledges of significant funding uplifts for school budgets and further education colleges will be key to addressing the teacher recruitment crisis, which is particularly acute in STEM subjects. To resolve the teacher workforce crisis in the long-term, this must be accompanied by a similar commitment to teacher retention, such as by reversing short-sighted cuts to subject-specific CPD for STEM teachers.
Moreover, the announcement of a series of new energy and infrastructure projects, such as green hydrogen plants and carbon capture and storage facilities, underscores the centrality of ensuring an engineering and technology workforce that is fit for the future to achieve the Government’s mission of turning the UK into a clean energy superpower.
Ahead of the publication of the full industrial strategy next Spring, we look forward to supporting the Government with the development of sector plans for key growth-driving industries, many of which depend heavily upon the supply of skilled engineers and technologists."
Nick Lathe, Finance Director of Mec Com Fabrications said: “It was a very difficult conundrum to navigate, and it appears that businesses are picking up the majority of the tax burden.
The increase in national minimum wage has the potential to squeeze other pay levels within companies and that – when combined with the employer NI contributions – will ramp up costs and put additional pressure on bottom lines throughout the country.
There is little scope for manufacturers to pass these on, so it will be a case again of looking how we work smarter and if we go through with planned investment and recruitment.
With my glass half full, I’m hoping that the impact of these tax rises will hopefully be partly offset by the market reacting positively to the delivery of a fully costed and balanced budget.
This in conjunction with current lower rate of inflation, should provide the opportunity for further imminent interest rate cuts and a little bit of relief to SMEs keen to grow but continually squeezed by external pressures.”
James Bamborough, Sustainability and Net Zero Policy Manager at the Institution of Engineering and Technology (IET) said: “We’re pleased to see that one of the measures in the 2024 Autumn Budget is a review into barriers facing greater adoption of transformative technologies that could enhance innovation and productivity. It is vital that the findings of this review are supported in the Industrial Strategy to maximise the potential of technology and digitalisation for the public good, thereby delivering a more productive and resilient economy.
“However, if we are to take full advantage of emerging technologies then we need the skilled workforce to fully utilise them. The UK is currently facing a shortage of 173,000 STEM workers and 49% of employers say there is a skills shortage among existing employees. We hope that Skills England will recognise the vital importance of engineers and proactively close the skills gaps.
“It is also very encouraging to hear the Chancellor deliver £3.4 billion for the Warm Homes plan over the next three years. 80% of the houses we will be living in in 2050 are currently in use, representing 95% of the decarbonisation required in our homes. However, if Britain is to fix the foundations of its housing stock, decarbonise homes, lower energy bills and boost health we must see exactly how this money will be spent. This must include an understanding of technologies and geographical implications of said technologies to ensure that the best solutions are used in the correct way.
“The Government’s commitment to 11 new green hydrogen plants will also support their goal of making Britain a clean energy superpower. However, transitioning to hydrogen will require a range of technical skills in addition to academic and industrial researchers though to project management and customer-facing skills. The deployment of green hydrogen must be part of a holistic approach to the energy transition and the £6.1bn support for core research funding in engineering will help nurture ground-breaking technologies and innovation in the energy sector.”
Louisa Harrison-Walker, Sheffield Chamber of Commerce’s Chief Executive, said: “Small businesses power the UK economy, drive innovation, create jobs, foster local communities, contribute significantly to economic resilience and growth across the nation, but particularly in Sheffield, where 98% of businesses are SMEs.
“If they struggle to operate, and grow, our local investment falters, our local economy stagnates, and our innovation at a regional level slows down.”
However, whilst an increase to employer's NIC will be a challenge, as well as the 6.7% increase in the National Living Wage, the increase in Employment Allowance thresholds from £5K to £10K meaning that smaller businesses are supported with employment costs, is welcomed.
Investment was a key driver in this Autumn Budget, with plans to raise infrastructure spending, sector-specific business rates relief and with the annual investment allowance and R&D being retained, the Chancellor aimed to take the bite out of significant cost burdens for business.
Louisa added: “It is hoped that, while many firms find it more challenging to invest and recruit in the short-term, the Chancellor’s longer-term framework will provide stability for the economy sooner rather than later.
“Ultimately, much now rests on the Government’s next steps to build business confidence. We need action rather than words. As such, time will tell how this budget truly affects the business community.”
Sheffield Chamber also welcomed investment in regional and northern transport.
“Whilst the northern rail scheme currently doesn’t include Sheffield, its assistance in connecting the north is a much-needed start,” Louisa said.
“The pledge to increase local transport funding, including a cash injection into Supertram, will certainly help grow the region’s economy.
“Activity in this area must be maintained to help grow business in South Yorkshire and beyond.”
Matt Rooney, Head of Policy at the Institution of Mechanical Engineers, responded: “In this Budget, Chancellor Rachel Reeves has recognised both the contribution of R&D to economic growth and the importance of long-term stable funding for UK science and innovation to flourish.
Going forward, the government’s focus should be on working with the engineering sector to deliver an Industrial Strategy that will boost productivity and support the development of a skilled workforce whilst delivering on our Net Zero commitments.”
This is a developing story. We'll give updates on the situation as we learn more. 09:50am 01/11/2024
