IN THIS ISSUE - EEF meet with Economic Secretary to HM Treasury, Justine Greening - EEF pushes for tax policy to play a central part of Advanced Manufacturing Growth Review - EA says funding cuts won’t affect performance - In the news - Week in Review The week ahead
EEF meet with Economic Secretary to HM Treasury, Justine Greening
As part of EEF’s lobbying ahead of the March Budget, the government’s Growth Reviews and proposed carbon taxes, EEF’s Tax Policy and Environment Policy Committees met Justine Greening, the HM Treasury Minister responsible for the government’s proposals for new carbon taxes.
The Minister spoke of needing to grow and rebalance the economy, while keeping mindful of the difficult and pressing need to keep the course with deficit reduction plans. EEF members focused on the government’s 12 Growth Reviews – including one on Advanced Manufacturing – commenting that manufacturers were mobile: the investment decision firms face is not whether to reinvest, but whether to invest in the UK or else where.
Consequently, EEF members noted that tax reforms that impacted on cash-flow – such as the change in capital allowances or environmental taxes that added costs – would simply push investment and growth abroad.
On environmental taxes specifically, EEF members challenged the Minister to provide greater transparency on the impact costly carbon taxes on manufacturing and to urgently simplify the complex set of environmental measures that leave many manufacturers facing three forms of carbon taxes.
For further information contact Jeegar Kakkad, Senior Economist
EEF pushes for tax policy to play a central part of Advanced Manufacturing Growth Review
Amongst several issues, the Department of Business’ Advanced Manufacturing Growth Review has been looking how the UK’s investment climate affects manufacturers’ ability to grow.
As part of this process, EEF has strongly pushed for the Review to consider the impact of recent tax changes – specifically to capital allowances and environmental taxes – on manufacturers’ cash-flow. Traditionally, however, tax policy is the remit of HM Treasury and BIS have shied away from discussing tax policy. Given the importance of cash-flow to investment, EEF has firmly stated that a growth review that did not address the impact of tax changes on manufacturers’ ability to invest would ring hollow with business. Consequently, EEF were involved in a joint meeting with BIS and HMT officials on how tax policy affects investment decisions and suggested specific proposals for reforming the Short-Life Asset Regime that EEF members believe would benefit manufacturing.
For further information contact Jeegar Kakkad, Senior Economist
EA says funding cuts won’t affect performance
The Environment Agency sought to reassure EEF this week that the rapid and deep funding cuts it will experience between now and 2015 will not result in business failures.
The EA’s enforcement activity touches all of our members and significantly for a sizeable proportion. In a meeting with Harvey Bradshaw, the Agency’s head of business performance and regulation, the Agency insisted that a 30% downsizing of its environment and business directorate would not lead to inconsistencies in how it regulates manufacturing. But the EA did confirm that new approaches to regulation were being explored. We will be interested in knowing the practical implications of such a cut and if your relationship with the Environment Agency is affected over the coming months we would be interested to know. Please contact Susanne Baker, Senior Climate & Environment Policy Adviser.
In the news
Our views on growth have been reported in The Observer and Sunday Times (link not available, but published on 06/02/11) whilst our response to the changes to trade support and the latest trade data were reported in The Guardian and Daily Telegraph. Our response to the agreement on bank lending was covered in the Daily Telegraph once more whilst we ended the week with the response on interest rates being covered in The Guardian and Independent. Broadcast interviews were given by EEF's Chief Executive, Terry Scuoler, to Channel 4 News and BBC Business Breakfast whilst Chief Economist, Lee Hopley, appeared as a guest commentator on the BBC Business Programmes, 'In the Money' and 'Show me the Money'.
Week in review
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 UK Trade
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The UK’s deficit on trade in goods widened to £97.2bn in 2010, compared with a deficit of £82.4bn in 2009. Total exports rose strongly, by 16.9%, but total imports outpaced this, rising by 17.2%. |
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 Index of Production
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The seasonally adjusted index of manufacturing in December 2010 rose by 4.4% cent compared with December 2009. However, manufacturing output fell by 0.1% between November and December 2010. |
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 MPC rate decision
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Once again, the MPC voted to maintain the Bank Rate at 0.5% and the stock of asset purchases at £200 billion. |
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 Producer Price Index
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In the year to January input prices for manufacturers rose 13.4%, this is the fastest rate since October 2008. Price rises were largely driven by oil and imported commodities.
Output prices also rose over the year, by 4.8%. |
The week ahead
Tue 15th: CPI
Wed 16th: Labour Market Statistics
Thu 17th: EEF Pay Settlements
Fri 18th: Retail Sales; Public Sector Finance
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