George Osborne said that manufacturing in the UK is growing faster than any other sector, with investment set to be up 11 percent in 2014.
Delivering his 2014 Autumn Statement, the Chancellor said that while business investment is rising strongly, there is still “much more to do”.
“We want to help British businesses do more research and development – this is crucial to our productivity,” said Osborne.
The Chancellor is increasing the R&D tax credit for small and medium companies to 230 percent and the credit for large firms to 11 percent.
He also highlighted the need to by supporting the businesses that create jobs and apprenticeships in order to boost skills, announcing that National Insurance on young apprentices will be abolished.
Osborne also highlighted the need to encourage British firms to export outside of the Eurozone, announcing the availability of a £45 million package available connect first-time exporters to the faster growing emerging economies of Asia, Africa and South America.
“With a General Election less than six months away it wasn't surprising that the Autumn statement bristled with positive concessions for small and medium sized businesses in what was generally an innovative presentation,” commented Philip Law, Director General of the British Plastics Federation.
“The abandonment of NI for apprentices under 25s will encourage their recruitment and the promised reform of Business Rates will potentially alleviate a longstanding bugbear. The increase in the R&D tax credit will strengthen innovation.
“The £45 million dedicated to exports at first sight sounds substantial but it has to be spread widely across all business. Much depends on how it is applied. Trade Access Programme funding for exhibition participation is already under pressure.”
Improving productivity for all businesses also demands a major investment in Britain’s infrastructure, said Osborne, outlining his plans for the “biggest road building programme” for a generation.
The Chancellor said that much of this investment would be seen in the North of the country, where the Government is looking to create a “Northern Powerhouse” that would create a “more balanced” national economy.
“The BPF has its own 'powerhouse' of northern member firms and the effort made to reinforce their position and to help restore the balance with a service dominated south east is positive,” Law continued.
There was also the announcement of investment in a new high value manufacturing research facility, as well as a Sovereign Wealth Fund for the North of England so that the shale gas resources of the North are used to invest in the future of the North.
On housing, the Chancellor announced that Stamp duty would be cut for 98 percent of people who pay it, with only the highest value residential properties paying more. This, said Law, would to some extent assist the affordability of housing with the “knock-on effects” a house purchase has for pulling manufactured goods through the economy.
In his statement, the Chancellor said that the British economy is forecast to grow by three percent, making it the fastest growing economy in the G7.
“Over the last year we have grown two and a half times faster than Germany; over three times faster than the Eurozone; and over seven times faster than France,” he said. “Growth in the UK next year is forecast a little higher at 2.4 percent, with quarterly growth moderating as it returns to trend. Then 2.2 percent in 2016, 2.4 percent the year after, then 2.3 percent in 2018 and 2019.”
Reacting to the statement, David Brimelow, Managing Director of Manchester-based polythene manufacturer and supplier, Duo UK, commented: “It’s heartening to hear that manufacturing is the fastest growing sector of the UK economy and that’s testimony to the wealth of talent within the sector and the determination over the years of business leaders to get on with the job.
“We’re a niche manufacturer and invest a lot in training and development but our growth is still restrained by a lack of skilled individuals, particularly for our engineering positions. We are wholehearted supporters of the Apprenticeship Scheme but, while the abolition of National Insurance contributions for under 25s will help, it won’t fix the fundamental problem of an education system which isn’t vocationally focused. If the Government really wishes to support manufacturing, it should consult with businesses and develop a robust vocational training programme designed for school leavers who want careers, not jobs.”