Last week’s Budget drew generous praise from the manufacturing sector. The Chancellor of the Exchequer’s announcement that he would not be cutting the Annual Investment Allowance from £500,000 to just £25,000 at the end of the year was particularly well received, as was the cutting of Corporation Tax to 20% and the freezing of fuel-duty rates.

There was also widespread support for specific incentives related to new enterprise zones, assistance for the North Sea oil and gas sector, energy-cost support and the development of driver-less vehicle technology.

Chris Coopey, head of the manufacturing group at the MHA association of independent accountants, said: “George Osborne’s Budget speech resulted in a raft of announcements that are largely seen as positives for the manufacturing and engineering sector.

“This Budget demonstrates that, at long last, governments are ‘smelling the coffee’ and realising how much the country can benefit from growing its manufacturing base. The announcements on R&D tax credits were particularly
welcome. With improvements for both the large- and small-business schemes, together with a campaign to increase awareness among SMEs, the Chancellor is incentivising the sector to innovate, which has to be the answer to growing the UK’s global share of manufactured goods.”

However, Mr Coopey regretted that “one area that the Budget didn’t really address was the skills gap. Government needs to take skills out of the departmental ‘silo’ that it seems to fall into. The Department for Business should be funded and tasked to develop our future workforce from secondary-school level up, in a way that means that they, rather than the Department for Education, develop the curriculum to start to produce the many thousands of engineers that we currently lack.”

Terry Scuoler, chief executive of the EEF, said: “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. In addition, he has committed to a stable and competitive tax regime, which we wholeheartedly support.”

Commenting on changes to the R&D Tax Credit system, EEF chief economist Lee Hopley said: “Further efforts to make the R&D tax credit more accessible for small claimants will be welcomed. This long-standing relief within the tax system has come to be valued by manufacturers, for whom investments in R&D are becoming ever-more important for business success. If these changes can bring more companies into the scheme and encourage higher levels of investment in innovation, that can only be good for ‘UK plc’ in the long run.”