Publishing its submission in advance of the Pre-Budget report, EEF the manufacturers' organisation is calling for government to address both the need to restore the public finances and provide continuity of support to the productive sectors of the economy that are vital to the UK’s long term economic health.
Commenting, EEF Director of Policy, Steve Radley said:
"We have been through an unprecedented period of instability from which we have yet to emerge. With the road to recovery likely to be long and uncertain, the need for a stable business environment will be just as important during the upturn as it was in the recession. Failure to do this risks pulling the rug out from under companies just as growth looks set to return.
"We must now see policy consistency to rebuild confidence across the economy. But it is also critical that the tax system, forward spending plans and financial system all pull in the same direction to support investment that will support the shift to a more balanced economy."
EEF warned that the move to rebuild fiscal credibility must not mean that businesses shoulder the burden of higher taxes when what they need is support for investment while the economy remains fragile.
In response, EEF is recommending that, in the short term, government maintains the supportive policy measures that have helped to put a floor under the recession, but have yet to deliver the confidence that manufacturers’ need to make the productivity enhancing investments that will secure their competitive future. These include:
- Extending the 40% first year capital allowances for an additional 12 months, until April 2011.
- Freezing the small companies’ rate of corporation tax until April 2011.
- Seek EU State Aid approval to extend the Letter of Credit Guarantee Scheme to developed economies.
- Ensure the R&D tax credit rules reflect the intention of the credit.
- Provide clarity on the future funding for skills programmes.
- A temporary extension of a payable R&D tax credit to large companies engaged in low-carbon projects.
In addition, the recent failures of the financial system have place an even greater onus on government to provide a single and easily accessible source of finance, such as a Bank for Industry, for ambitious, growing companies.