IN THIS ISSUE - Government launches consultations on R&D tax credit and patent box - EEF and members lobby Government on Water White Paper - Roundtable on trade and investment with Lord Green - Think tank launches challenge to Government’s climate change policy - EEF attends Business Finance round table - Weekly focus – Waste review lacks teeth - In the news - Week in review - The week ahead
Government launches consultations on R&D tax credit and patent box
In November 2010, the government began consulting on reforming the R&D tax credit and on the proposed patent box, which would provide a 10% corporate tax rate on profits derived from patented technologies. On 10 June, the Government published its response to the initial raft of responses from industry and launched a second, more detailed phase of the consultations. On the back of lobbying by EEF and our members, the R&D tax credit consultation seeks further input on three of EEF’s five priorities for reforming the R&D tax credit, including giving smaller firms advanced clearance on their R&D claims, improving guidance on when R&D ends and production begins and on allowing the credit to be offset against a wider range of taxes, not just corporation tax.
Unfortunately because of cost concerns, the Government decided not to pursue EEF’s fourth recommendation of expanding the definition of R&D to cover a wider range of development and pre-commercialisation costs. EEF’s fifth recommendation – to increase the level of the credit – was announced by the Chancellor in the Budget. On the patent box consultation, EEF had pushed to expand the benefit of the 10% tax rate beyond just patents and adopt a wider innovation box as the Netherlands and others have done, but the government has chosen to pursue a more limited version of the tax break for the foreseeable future. EEF, through our members on the Taxation Policy Committee, will be responding to the government’s latest consultation.
EEF members can find the consultation on R&D tax credits here and the Patent Box here and can input their views to EEF’s response by contacting Jeegar Kakkad, Senior Economist
EEF and members lobby Government on Water White Paper
The EEF Environment Committee met with officials from Defra to discuss the upcoming Water White Paper for reforming the water management system in the UK. It is envisaged that the white paper will create more certainty for the availability of water and provide incentives for water efficiency. The Natural Environment White Paper, published by Defra last week, set out a long-term vision for the future of the water management system in the UK, that will ‘provide clearer signals to abstractors to make the necessary investments to meet water needs and protect ecosystem functioning.” In the short-term, it is expected that the Water White Paper will tackle the legacy of unsustainable abstraction by promoting licence trading and revoking unused licensing. Members raised concerns about increased costs in the future; the Committee has committed to engage with Defra further into the Autumn.
For more information please contact Helen Drury, Senior Climate & Environment Policy Adviser
Roundtable on trade and investment with Lord Green
EEF was amongst those invited to discuss the opportunities and challenges for UK exporters and what further actions the Government could take to support increased trade. Much of the discussion focused on domestic challenges to investing in new market entry and companies’ ability to capitalise on markets with significant growth potential, including the skills base and access to finance. The Minister will also be seeking companies’ views on the UK presence at major international trade fairs, which EEF will feed into in due course.
For more information please contact Lee Hopley, Chief Economist
EEF attends Business Finance round table
On Tuesday EEF attended the monthly Business Finance Round Table discussion with the major UK banks and other UK business representation groups. EEF participates in this forum to engage with the UK’s major banks directly and to raise issues of concern to our members on access to finance. The major items of discussion were the release of the first results from the Business Finance Taskforce banks’ access to finance survey of 5,000 UK businesses, due for 12 July, and the upcoming launch by these banks of a network of business mentors to help companies make themselves investment ready.
For more information contact Andrew Johnson, Senior Economist
Waste review lacks teeth
This week saw the publication of the Government’s overdue review of waste policy in England. Its launch has been notable perhaps for the chorus of condemnation by an unusual mix of trade associations, retailers and campaign groups.
Most of the criticism has been over the document’s lack of ambition. There’s some truth in this. There’s an awful lot of rhetoric and meaningful intentions on the creation of a zero waste economy but without the concrete policy framework which will deliver this grand political vision.
Despite this, there is a notable shift in thinking in some key areas. Whereas in the past the Government’s focus has been predominately focused on household waste, there is a welcome new focus on improving business waste collections. EEF has long argued that a lack of cost-effective, accessible waste facilities has undermined attempts by smaller manufacturers to manage their wastes more sustainably. The work underway to encourage local authorities to open up their facilities to manufacturers is long overdue and welcome.
There are other pledges which EEF will be considering in more detail. Potential bans on the landfilling of wood waste sound sensible, but we know that some manufacturers can struggle to find buyers for their wood unless it has been through some labour-intensive preparation. Textiles and biodegradable wastes may also be banned in landfill sites in future. Clearly this can only happen once a national network of facilities is in place to divert these materials to.
The need for regionally relevant waste infrastructure is an issue EEF has pushed government to consider in the past. It is no secret that the UK's waste infrastructure is yet to be fit for purpose. It is therefore welcome that the government has confirmed that there will be a new duty on local authorities “to cooperate” on in the Localism Bill. This may go some way to address concerns about the impact of scrapping Regional Development Agencies on regional waste infrastructure planning.
Landfill tax is also set to further increase. A new base rate of £80 per tonne has been announced for 2014-15. Other commitments include potentially increased packaging targets on packaging producers in the next few years and the promise of a new Waste Prevention Programme sometime in the future. We will also need to monitor plans to drive waste prevention through product design and standards.
We believe the Government can go further to help manufacturers improve their resource efficiency and make it easier for you to manage your waste more sustainably. Over the coming months we will work with members to ensure that the issues that you are struggling with are being dealt with by government. This work will be used to campaign on waste policy as the government seeks to deliver its strategy.
If you would like to get involved please contact Gareth Stace, Head of Climate & Environment Policy
EEF IN THE NEWS
EEF's coverage this week began with a response to the latest manufacturing output data in The Guardian and a piece in the Daily Mail by Nigel Lawson, which referred to the warnings we have made on the cost of energy policy. Our views on the image of engineering and skills featured heavily in an editorial in the Independent on Sunday whilst our photography competition was featured in a response to Lord Sugar’s comments on engineers in the FT and a diary piece in The Times (subscription required).
THE WEEK IN REVIEW
CPI & RPI Inflation
Both CPI inflation and RPI inflation held steady in May, with the CPI up by 4.5% and the RPI up by 5.2%. For the CPI, annual food price rises of 5.8% were offset by falls in inflation across a broad range of goods and services. Stripping out the affect of recent tax rises, the CPI rose by just 2.8%.
The numbers of people in employment rose by 80,000 in the three months to April. Private sector employment rose by 104,000 in the first quarter and is up 504,000 since the recession ended. The ILO measure of unemployment fell by 88,000, while the ILO unemployment rate also fell, down to 7.7% from 8.0% in the previous three months. The Claimant Count measure of unemployment – which records the number of people claiming Job Seekers’ Allowance – rose to 1.49 million in May, up 19,600 since April.
Retail sales volumes fell sharply in May, after a relatively strong boost in April from the warm weather, the late Easter and the royal wedding. Sales were down by 1.4% in between May and April. Stripping out automotive fuels, retails fell by 1.6% on the month.
THE WEEK AHEAD
Tue 21st: Public Sector Finances
Wed 22nd: MPC Minutes
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