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Not much head room in Chancellor’s Spring Statement

Posted on 26 Mar 2025. Edited by: John Hunter. Read 459 times.
Not much head room in Chancellor’s Spring StatementRachel Reeves, Chancellor of the Exchequer, delivered her Spring Statement earlier today

Responding to the Chancellor of the Exchequer’s Spring Statement to Parliament earlier today where she revised growth projection downwards and announced spending cuts, Stephen Phipson, CEO of Make UK, said: “In the context of a challenging and, rapidly changing, economic and political environment the Chancellor is facing a difficult fiscal balancing act and, the unenviable situation of having to rob Peter to pay Paul.

“Industry will welcome and support the Chancellor’s focus on maintaining economic stability and, increases in infrastructure and defence investment but, it is clear the Chancellor will continue to face difficult spending choices amid the likelihood that investment in defence and security will have to rise further given the scale of threats we face. UK manufacturers stand ready to support the government to scale up our defence manufacturing, a critical national priority.

“Looking ahead, all eyes will now be on Government bringing forward a comprehensive and fully funded modern, long-term industrial strategy which has advanced manufacturing at its heart. This must be aligned across Government with a defence industrial strategy as well as energy, trade and skills strategies to demonstrate to business and foreign investors that there is joined up thinking on how to grow UK manufacturing, the engine of the economy and the sector which will deliver our security and ‘net zero’ future.”

Efficient delivery of public services

The CBI’s CEO Rain Newton-Smith, said: “Weaker growth this year is a serious setback but not a surprise given the burden businesses are shouldering after the Budget. The Chancellor has kept her promise to business, made at our conference, not to raise the burden further, and focus on the efficient delivery of public services.

“It is the right approach that the Government asks of the public sector the same as it has been expecting of business since the Budget - to absorb costs through agility, modernisation and innovation. Firms are already braced for a difficult few months ahead with NICs, and National Living Wage increases next week. In its current form, the Employment Rights Bill risks imposing a significant regulatory burden onto companies with damaging consequences for growth, jobs and investment. A landing-zone that commands the confidence of businesses and workers can still be found by taking the time to build a consensus that will give these reforms the footing to have a positive lasting legacy.

“Protecting public capital spending is the right move to create the foundations for future growth but the government cannot deliver growth alone. Only the private sector can provide investment at the pace and scale we need to boost productivity, create jobs and improve living standards.

“The Government must use its Spending Review to double down on unlocking investment to secure the more positive outlook for long-term growth. Setting a world-leading goal for R&D investment, giving employers the flexibility to choose the training and qualifications that make sense for their workforce, and improved public private partnerships to fund better homes, better schools and better transport would all help deliver growth.”

Importance of investing in skills recognised

Beatrice Barleon, EngineeringUK’s head of policy and public affairs, said: “The Chancellor’s recognition of the importance of investing in skills through a new training package for up to 60,000 new construction workers is welcome and essential to delivering on the Government’s growth mission, which is underpinned by plans to build 1.5 million homes and to strengthen the UK’s national security.

“EngineeringUK is calling on the Government to go further in the Spending Review and Autumn Budget later this year and look to address the financial barriers to technical and vocational entry routes into engineering and technology for all young people. The Government must recognise its role in training the next generation and look to move towards a new model of directly funding apprenticeships for 16- to 18-year-olds to help reverse the decline in uptake of apprenticeships for this age group.

“The Government must also look to invest in programmes and activities we know work in getting young people interested in careers in engineering and technology, and support the teachers that will help deliver them. We look to the Government to reverse recent cuts to continuous professional development for STEM teachers and continue to support outreach programmes in schools. The investment in construction training announced today is a positive step in the right direction, but this action needs to be replicated through investment across the full STEM skills pipeline.”

Chris Iveson, the CEO and co-founder of technology startup FourJaw Manufacturing Analytics, believes that the Chancellor’s Spring Statement includes welcome words for the UK manufacturing industry, which has digitisaled faster than any other part of the UK economy and achieved productivity gains that exceed those in other major manufacturing economies in recent years. However, he also says that these words now need to be turned into action.

Credible action

He said: “It is clear that the world has become a more uncertain place in the last few months, but slow economic growth has been a challenge for years. There were welcome words for UK manufacturers – we need the UK to be an industrial powerhouse again – but the Government needs to turn these words into credible action that makes a difference on the shopfloor. Right now, that means the kind of support that gives businesses the confidence to make investments that support growth.”

“Manufacturers are impatient for change, and most of those I speak to have decided to make that change themselves. This industry has digitalised faster than any other part of the UK economy and achieved productivity gains that exceed those in other major manufacturing economies despite the policies of the last two Governments, not because of them. This industry is also incredibly concerned about the increases in National Insurance and the impact on their cost base. Manufacturers are making difficult decisions to manage these tax increases today and exploring how to improve productivity to mitigate their bottom-line impact in the future.

“Productive manufacturing supports jobs, lives and communities, and the Government needs to do all it can to help manufacturers. Commitments to boosting Britain’s defence industry are welcome news for UK aerospace and defence manufacturers and companies within the supply chain, which employ some 290,000 people supporting them. We need to see what the proposed defence procurement changes look like, but anything that improves the ability of UK manufacturers to secure contracts with the Ministry of Defence (MoD) should be welcomed.

“The opportunities for manufacturers go beyond defence, though. The investments made by UK manufacturers in new technologies such as artificial intelligence (AI), automation, and analytics since the pandemic mean they are in a better place than ever to compete on cost and quality with locations that depend on cheap labour. Manufacturing is already coming home, and there is a huge opportunity to make UK manufacturing a major growth industry again by supporting the reshoring of work too. We would like to see the commitments made to support new construction skills replicated in manufacturing.”

“UK manufacturers have had to deal with too much uncertainty for too long. I hope that after today's Spring Statement, the Government takes steps to support the backbone of the British economy and provide the much-needed support this vital sector of our economy needs to flourish once more.”