Chancellor Jeremy Hunt said there should be a ‘recovery made in Britain’ in his Autumn statement last November.
At a time of great continuing financial difficulty, that puts a big responsibility on British businesses, among them our manufacturing sector that employs some 2.5 million people.
But, with a bit of hindsight, did the budget provide the backing that these companies need to drive our economy forward? Has it reduced the uncertainty they face?
Manufacturers certainly need support. From skyrocketing inflation and high energy costs to the continued challenge of recruiting and retaining staff, they are fighting hard to survive and thrive.
I spoke to Fhaheen Khan, senior economist at Make UK, to get his views on the expected impact of some of the Autumn Statement announcements in 2023.
Other welcome changes included the extension of the government-funded, industry-led Made Smarter Adoption programme, which supports the adoption of digital technologies in manufacturing. Over the last four years Made Smarter has supported 2,500 businesses with grant funding, skills training and leadership advice, and it’s good news to see the scheme is being rolled out to the East Midlands.
There was also the overhaul of Solvency II regulations, a move intended to unlock tens of billions of pounds for investment. Fhaheen described this as “a clear signal to channel some of the UK’s pension savings into productive investments in the British economy.” Whilst this might at first seem that more capacity will come into the insurance markets, insurers are facing raising repair costs due to inflation and need to factor in claims inflation on the ongoing liability claims that may take several years to settle, so no immediate impact is likely.
As my team and I have learnt from regularly speaking to manufacturers up and down the country, recruitment and staff retention are big, long-standing problems and the sector needs solutions.
Another big challenge for manufacturers, like businesses in other sectors, is the high cost of energy. There is great uncertainty about the future of energy support and clarification is needed quickly for energy-exposed manufacturers.
Also, while on the face of it, R&D spending will increase, the relief for SMEs claiming R&D tax credits will be much less generous, Fhaheen said. Many R&D intensive high-tech SME manufacturers who may feel unfairly hit will consider this a poorly timed move in a liquidity crisis, he added.
The overall message from Fhaheen and Make UK is that manufacturers are continuing to have to “operate in survival mode”. Some are having to choose whether to cut production or stop operating altogether.
At Howden, we will continue working with our manufacturer clients to help them through these difficult times.
To find out more about how we can help, contact the specialist Howden team. Call 01234 230275 or email: [email protected]
At a time of great continuing financial difficulty, that puts a big responsibility on British businesses, among them our manufacturing sector that employs some 2.5 million people.
But, with a bit of hindsight, did the budget provide the backing that these companies need to drive our economy forward? Has it reduced the uncertainty they face?
Manufacturers certainly need support. From skyrocketing inflation and high energy costs to the continued challenge of recruiting and retaining staff, they are fighting hard to survive and thrive.
I spoke to Fhaheen Khan, senior economist at Make UK, to get his views on the expected impact of some of the Autumn Statement announcements in 2023.
Supporting investment
Fhaheen and his colleagues broadly welcomed changes including help with business rates and protection of infrastructure and science spending.Other welcome changes included the extension of the government-funded, industry-led Made Smarter Adoption programme, which supports the adoption of digital technologies in manufacturing. Over the last four years Made Smarter has supported 2,500 businesses with grant funding, skills training and leadership advice, and it’s good news to see the scheme is being rolled out to the East Midlands.
There was also the overhaul of Solvency II regulations, a move intended to unlock tens of billions of pounds for investment. Fhaheen described this as “a clear signal to channel some of the UK’s pension savings into productive investments in the British economy.” Whilst this might at first seem that more capacity will come into the insurance markets, insurers are facing raising repair costs due to inflation and need to factor in claims inflation on the ongoing liability claims that may take several years to settle, so no immediate impact is likely.
Crisis and uncertainty
Fhaheen and Make UK have a dimmer view in retrospect of some of the other announcements. The rise in the National Living Wage, while good news for workers and necessary during the cost-of-living crisis, will result in rising costs for businesses, at a time when manufacturers - many of which have already given inflation-busting pay rises in their battle to keep staff - are already facing a cash flow crisis, he noted. In general, November’s announcement has done little to help manufacturers fix one of their greatest challenges - the shocking shortage of staff.As my team and I have learnt from regularly speaking to manufacturers up and down the country, recruitment and staff retention are big, long-standing problems and the sector needs solutions.
Another big challenge for manufacturers, like businesses in other sectors, is the high cost of energy. There is great uncertainty about the future of energy support and clarification is needed quickly for energy-exposed manufacturers.
Also, while on the face of it, R&D spending will increase, the relief for SMEs claiming R&D tax credits will be much less generous, Fhaheen said. Many R&D intensive high-tech SME manufacturers who may feel unfairly hit will consider this a poorly timed move in a liquidity crisis, he added.
The overall message from Fhaheen and Make UK is that manufacturers are continuing to have to “operate in survival mode”. Some are having to choose whether to cut production or stop operating altogether.
At Howden, we will continue working with our manufacturer clients to help them through these difficult times.
Help is at hand
The UK Corporate Team at Howden have been Make UK’s insurance partner for 15 years. We offer all our clients, regardless of the size of your business, an advised sale, meaning that we use our manufacturing expertise to advise you on the best insurance for your needs, and we support you every step of the way when taking out insurance and making claims.To find out more about how we can help, contact the specialist Howden team. Call 01234 230275 or email: [email protected]