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2 minute read - 1st September 2022

Manufacturing survey highlights need for more government action to support sector

Make UK is calling on the government to bring forward a package of policy measures on the scale of those seen during the lowest points of the pandemic to prevent permanent scarring of the economy and help avert a severe recession, potentially substantial insolvencies and job losses.

The call comes on the back of data from Make UK showing the impact of rising energy costs on companies, together with the cumulative effect of increases in other business expenses, such as increased transport costs and disruption, alongside National Insurance contributions and the proposed increase in Corporation Tax.

According to Make UK, the impact of the potent cocktail of factors from the last few years, now being compounded by the energy crisis, is as big a threat to manufacturers as the Covid pandemic, if not greater.

Make UK is calling on the government to take action to support manufacturers as they face a variety of cost increases and disruptions / Picture: Getty/iStock

As well as the impact of the rise in energy costs, almost three quarters of companies (74%) say they are facing increased transportation costs and more than four fifths (82%) reported transport disruption as an issue for their business. Four in ten companies surveyed said that disruption at the Dover Calais crossing was causing either catastrophic or major disruption to their business.

The measures proposed by Make UK include specific proposals on energy, as well as a range of measures to aid cashflow, provide greater access to labour supply along with initiatives to encourage investment, especially in energy efficiency technologies.

Make UK chief executive, Stephen Phipson, said: “Whilst industry has recovered strongly over the last year, we are clearly heading for very stormy waters in the face of eye watering increases in energy costs and a difficult international environment. This threatens to shatter expectations of a sustained recovery from the pandemic.

“Some of the factors impacting companies are global and cannot be contained by the UK government alone. However, just as it is quite rightly taking measures to protect the least well off, given the rate at which companies are burning through their balance sheets just to survive, it must take immediate and substantial measures to help shield companies from the worst impact of escalating costs and help protect jobs. We need a shock and awe suite of proposals to protect viable companies and jobs and we need them now. Manufacturers cannot afford to wait for a functioning government to get its feet under the table.”

Immediate measures being proposed by Make UK include:

Reduce VAT on business energy bills from 20% to 5%
Reverse the National Insurance contributions increased in 2022
Extend current business reliefs applied to other sectors to manufacturing
Extend business rates reliefs for both building improvements and eligible plant and machinery
Introduce a long-term capital allowance regime to spur investment in green technologies and energy efficiency measures to reduce energy consumption
Make the Annual Investment Allowance permanent
Undertake a full and fundamental reform of business rates
Commission the Migration Advisory Committee to review and revise the shortage occupation list before early-2023

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