Intelligence Briefing - Tax changes, Green Growth, Budget and Growth review

Tax changes in the pipeline for manufacturers?

Yesterday, the Office of Tax Simplification (OTS) launched the final report of its review into 1,042 reliefs in the UK’s tax system. Set up by the Chancellor in July 2010, the OTS was tasked to review how to simplify the tax system for small businesses and to review the multitude of reliefs and allowances that complicate the UK’s tax code.

EEF has participated in this latter review, working with a handful of independent tax experts to identify the reliefs that should be simplified and making recommendations for reform.

Although this report only looks at simplifying 74 of the 1,042 reliefs, there are two conclusions that could affect manufacturers;

Firstly, the OTS has recommended reforming capital allowances to reflect accounts depreciation – a change that would significantly improve the investment climate for UK manufacturers in the UK.

Secondly, the review has suggested reforms for boosting the take up of Enhanced Capital Allowances. It will now fall to the Chancellor to decide whether to adopt these proposals and EEF will continue to push for the government to do so.

For further information contact Jeegar Kakkad, Senior Economist

Talking to the Opposition and government on ‘Green Growth’ and green regulation

EEF this week hosted a breakfast briefing on ‘Green Growth’ in conjunction with the Fabian Society at which Steve Radley, EEF Director of Policy and External Affairs, was one of the main speakers alongside Meg Hillier MP, Shadow Secretary of State for Energy and Climate Change, and Gordon Banks MP, Shadow Business Minister. During the discussion both Ms Hillier and Mr Banks were critical of the government’s one-in-one-out approach to reforming regulation, and were also critical of the way the Government is creating a Green Investment Bank. Meg Hillier has now agreed to attend an EEF event in the summer, and we will continue to develop closer links with the Opposition over the next year.

Later in the week EEF put across its views on the Carbon Reduction Commitment to Greg Barker MP, Energy and Climate Change Minister, at a CRC stakeholder event organised by his Department. EEF will continue to work with DECC’s officials and lobby ministers on its climate change and environment positions over the coming months.

For more information contact Rocky Lorusso, External Affairs Adviser

Weekly focus: Budget and Growth review

One of EEF’s major campaign themes this year is around removing barriers to manufacturing growth, such as distortions in the tax system, the growing burden of regulation, ongoing problems with access to finance and skills shortages.

As part of this, the Budget statement on 23 March 2011, and the Growth Review that will be published alongside it, will be a crucial test as to whether the government is willing to undertake specific measures to back up the many positive statements we have heard from ministers recently about the importance of manufacturing.

At the end of last week EEF wrote to the government with a formal submission to the Budget and Growth Review outlining the key issues we would like to see addressed when the Chancellor gets up to make his statement. The main recommendations are set out below:

In the run up to the Budget we will be meeting policy-makers to repeat these messages and we will provide full coverage of the Budget on the day through an Intelligence Briefing special.

For further information on any of these issues contact Lee Hopley, Chief Economist.

In the news

As outlined above, a lot of the business press coverage at the moment is speculating about what will be in the Budget/Growth Review, and our submission was widely reported including pieces in the FT, Guardian, Independent and Times (only available by subscription). Our Chief Executive Terry Scuoler also had an opinion piece in the Daily Telegraph whilst Policy Director, Steve Radley, was interviewed on BBC Radio 5.

The Week in Review

	GfK NOP Consumer Confidence	GfK NOP’s Consumer Confidence Index remains low, though it improved slightly in February, rising by one point to -28. There were small increases in three of the five sub indices but public perception of the general economic situation over the last 12 months and over the next 12 months decreased by one point each.
	Manufacturing PMI	The manufacturing PMI remained at 61.5 in February, equaling last month’s record high (which was revised down from 62.0). Inflationary pressures remained elevated with the rates of increase in output prices and input costs near to their respective record highs.
	Lending to individuals	Total lending to individuals rose £1.5 billion in January. Within the total, lending secured on dwellings rose £1.8 billion while consumer credit showed a net repayment of £0.3 billion.

The Week Ahead

Mon 7th: EEF Business Trends

Wed 9th: UK Trade

Thu 10th: Index of Production; MPC rate decision

Fri 11th: Producer Prices

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