Intelligence Briefing - 29 January 2010

Published: 29/01/2010

EEF's weekly briefing on the issues affecting manufacturers, as well as our regular round up of how we are representing manufacturers and the latest economic indicators.

Holidays and sickness absence - Government to review Working Time Regulations

Government has published interim guidance in advance of amendments that will possibly be made to the Working Time Regulations. This guidance, which EEF was active in preparing and follows our lobbying, is due to employers’ considerable concern over ECJ judgements on the interaction between sickness and holiday entitlement. Although the guidance does not have the status of the law it is essential as the government will consult on possible amendments to Working Time Regulations later this year and the earliest that any amendments to these Regulations are likely to be implemented is October 2010 or April 2011.

For further information contact: David Yeandle, Head of Employment Policy

UK IED Alliance continues its targeted lobbying campaign

The UK Industrial Emissions Directive (IED) Alliance met this week to coordinate its lobbying campaign in advance of EU–level ‘second reading’ negotiations which will begin shortly. The Alliance, which comprises 12 major UK trade bodies and was started by EEF, also shared intelligence on individual lobbying efforts. For its part EEF has recently met Linda McAvan MEP, who was strongly supportive of many Alliance concerns. EEF will also present its concerns on IED at the European Forum for Manufacturing next week, which will be attended by the Director General of the European Commission’s Environment Directorate, the Chairman of the European Parliament’s Environment Committee, and several influential MEPs.

For more information contact: Kevin Considine, Senior Climate & Environment Policy Adviser

Survey shows new health and safety law unnecessary

EEF has called on government to resist pressure for a new legal duty on company directors following evidence in our recent survey that health and safety is moving up the boardroom agenda. The finding comes at a crucial time with the Health and Safety Executive (HSE) Board due to discuss a new duty at its meeting on 24th February. An EEF survey, which is to be launched on 1st February, shows dramatically increased boardroom involvement in managing health and safety. In the coming weeks we will be using it to help make the case against new legal duties.

For further information contact: Steve Pointer, Head of Health and Safety Policy

Interest free, unsecured loans for manufacturers

The government funded Carbon Trust discussed how it can better publicise its interest free, unsecured loans, to help manufacturers reduce energy bills at a meeting with EEF this week. EEF also gained an insight into its forthcoming study looking at behaviour and barriers that currently hinder companies from reducing costs and carbon emissions. For our part, we highlighted the key findings from our recent climate change survey report.

For more information contact: Gareth Stace, Head of Climate & Environment Policy.


In the news

A range of issues have been covered in the news agenda this week headed by the fact the UK had scraped out of recession where we commented on the BBC website and in the Daily Telegraph amongst a number of nationals. A positive feature on the hopes of exporters in the Sunday Times also featured the comments of our Chief Economist, Lee Hopley. We also formally announced the appointment of our new Chief Executive, Terry Scuoler, and he was featured in a range of media from an interview in The Times to news pieces in Works Management and The Manufacturer. Our Head of Employment Policy, David Yeandle gave a number of interviews to the BBC, including the Today programme saying that our members want to retain a default retirement age linked to the State pension age.


Weekly focus

Tax and a balanced economy

While all the main parties recognise the need to rebalance the economy, manufacturers have seen very little detail how they intend to achieve that shift. And the detail we have seen has often left a key issue – tax – out of the discussion. Following on from our report from last year – A Manufacturing Future – Competitiveness and taxation in the UK – EEF have kept pushing for the political rhetoric on manufacturing to make the practical link between the tax system we have and the need to rebalance our economy. Neither the government’s Manufacturing Strategy nor its New Industry, New Jobs publications mention the importance of tax to manufacturing. Similarly, members’ have raised concerns that the next government could lower the level of capital allowances to 12.5%, a move that would divorce the tax system from the reality of manufacturing investment.

Based on the insights from EEF’s Manufacturers’ Tax Panel, that report set out a clear, positive strategy for reforming the tax system to encourage investment in modern machinery and overseas operations. Through a series of dinners and meetings with senior government and opposition ministers, with Senior Civil Servants in HM Treasury and the Department for Business, EEF’s members and economists have argued that the current system of capital allowances, for example, actively discourages investment in new, more productive machinery and equipment. We’ve also raised concerns that raft of new and higher taxes sends the wrong signal to mobile multinationals making decisions about where to locate their next investments.

And we’re slowly winning the case the manufacturers need a more competitive and predictable tax system. Government Ministers are now giving speeches about the importance of the tax system to rebalancing the economy. A Westminster Hall debate on manufacturing started by discussing EEF’s Manufacturing. Our Future. publication and centred on the importance of capital allowances to manufacturing investment. Opposition ministers and officials are regularly listening to members’ concerns and the Shadow Chancellor George Osborne’s speech at EEF’s biennial dinner on 3rd February will be a key guide as to whether the Conservative Party understands what modern manufacturing needs to succeed.


Week in Review

GDP

The UK emerged from recession in the fourth quarter of 2009. But official figures point to only modest growth of 0.1%, much weaker than consensus expectations of 0.4% growth. Manufacturing also came out of recession at the end of last year with initial estimates posting quarter-on-quarter growth of 0.4%.

Consumer confidence

Consumer confidence levels remained relatively stable in January, with the index recording a modest gain to -17. There has been some improvement in households’ expectations for their own financial situation and general economic conditions over the next 12 months.

 

The week ahead

Monday 1st: Manufacturing PMI
Wednesday 3rd: Services PMI
Thursday 4th: MPC announcement
Friday 5th: Producer prices


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