Intelligence Briefing 22 June 2012

News

DWP releases update on Löfstedt and Lord Young H&S reviews

The Work and Pensions Minister, Chris Grayling MP, this week released details of the progress made so far on implementing the recommendations of both the Löfstedt [PDF] and Lord Young [PDF] reviews of the UK’s health and safety system. The 29-page report details what has been completed, what is ongoing, and what is yet to be initiated.

Completed tasks include an independent evaluation of the Construction, Design and Management (CDM) Regulations 2007 to support policy development in this area, publication of new guidance to clarify Portable Appliance Testing requirements, the establishment of challenge panels to allow for cases of incorrect application of health and safety legislation to be addressed, and the extension of the reporting period under Reporting of Injuries, Diseases and Dangerous Occurrences (RIDDOR) Regulations 1995 from three to seven days for less serious injuries. The minister has also asked Professor Löfstedt to provide a ‘one year on’ assessment of how well his recommendations have been implemented so far, which he is to Submit in January 2013. EEF will continue to urge the government to pick up the pace on reform in this area.

For more information contact Terry Woolmer, Head of Health & Safety Policy

EEF lobbying on Energy Efficiency Directive looks to be paying off

The outline of a promising deal was brokered last week between the European Commission, Parliament and Council of the European Union looks to have steered the controversial Energy Efficiency Directive. The original piece of legislation threatened to burden manufacturers with a number of onerous new regulations. The emerging deal strikes a better balance between promoting energy efficiency and keeping a lid on unnecessary red tape by allowing member states to use existing domestic regulations to comply with the legislation. However, the issue is not completely settled as the European Parliament has yet to fully sign off all aspects of the deal. The European Parliament will be considering this over the next few months, and will be making a final decision in September. We will keep members informed as this process develops.

For more information contact Roger Salomone, Head of Business Environment

EEF takes part in panel event on UK’s low carbon future

The government risks damaging future low carbon sector expansion in the UK if it doesn’t recognise that our existing manufacturing sector is vital for its continued growth. This was the EEF message to delegates at a Royal Academy of Engineering event this week, where we shared a platform with Sir Alan Rudge (ERA Foundation and Juergen Maier (Siemens). The event was chaired by BBC broadcaster Evan Davis. EEF highlighted that simply increasing costs to UK manufacturers through a carbon price does not provide the right incentive to both domestic and overseas firms to invest here in low carbon manufacturing supply chains. In order to ensure the UK is on the right track, government must apply a ‘green & growth test’ to all policy and regulation, to achieve its ambitions of being the “greenest government ever” and growing the economy.

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

EEF raises EU ETS concerns in parliamentary event

At an event in Parliament organised by Sandbag (a campaigning organisation currently focused on emissions trading), Secretary of State for Energy and Climate Change, Ed Davey, said that taking a unilateral route to reducing carbon emissions was the right route to take for the UK. EEF challenged this statement. Whilst the UK does have an opportunity to play a vital part in cutting global emissions, increasing targets beyond those agreed will damage some sectors. We highlighted that not all sectors within the EU Emissions Trading Scheme (ETS) could pass on increased costs, such as the energy sector. Government must understand, for globally exposed sectors, the EU ETS might not be the right mechanism to deliver significant global action.

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

The Future Manufacturing Awards: Only Four Weeks left to submit your entry!

Once again, manufacturing is outperforming other sectors and proving why what you do is vital. Entering the EEF Future Manufacturing Awards will put your people, projects and performance strategies into the spotlight. It's the UK's biggest opportunity to show how successful your company really is – your chance to stand up and be recognised.

Contact Rachael Moss for information on award categories and advice on how to enter - phone 020 7654 1540, email awards@eef.org.uk or visit www.eef.org.uk/awards/

Weekly focus

Finance availability improving but more companies saying cost is going up

At last week’s Mansion House speech Chancellor of the Exchequer George Osborne MP and Governor of the Bank of England Sir Mervyn King set out the latest action to address the UK’s challenging credit conditions.

This action comprises two elements: firstly an agreement from the Bank of England to provide UK banks with the liquidity they need against a wider range of asset classes – this is important because of recent worsening access from UK banks to wholesale funding markets.

In addition to improving liquidity, the Bank of England on behalf of the government is offering banks cheaper funding lent directly to the banks themselves (in return for variable levels of collateral from the banks). However, on the condition that this cheaper funding is passed on to firms and households looking to borrow. This was described as the ‘Funding for Lending’ scheme.

The scale of these interventions – £20 billion for the additional liquidity support and a hoped-for £80 billion to support ‘Funding for Lending’ – indicates how seriously the government views the recent build-up of downside risks to growth and the current strain on credit conditions.

Funding for Lending also comes very soon after the National Loan Guarantee Scheme launched in March that also targets reducing the headline interest rate on loans to businesses to try to increase the flow of lending to UK SMEs.

EEF has welcomed attempts to improve access to finance, identified as a problem for members since the financial crisis. But the impact of these new initiatives is highly uncertain.

We are interested to talking to any members who have views on the Funding for Lending scheme or previously launched government schemes including the National Loan Guarantee Scheme or the Enterprise Finance Guarantee.

For more information contact Andrew Johnson, Senior Economist

In the news

The FT outlined our views on rebalancing as part of a feature on the economy, whilst on the same day The Independent carried our views on the need for more competition in Banking following the new ‘funding for lending scheme’ (see above). Our analysis of the latest manufacturing employment data was reported in the FT whilst our response to the announcement on mandatory carbon reporting was carried in the FT, Daily Telegraph and Daily Mail. To complete the range of policy issues The Independent carried our response to the plans to scrap O levels.

For more information contact Mark Swift, Head of Communications

Week in review

Consumer prices

CPI inflation fell to 2.8% in May, from 3.0% in April. Inflation fell further than had been expected this month, and is now at its lowest level since November 2009.

Labour Market Statistics

The number of people in employment increased by 166,000 in the three months to April, which was the largest quarterly increase in employment since August 2010. The ILO measure of unemployment fell by 51,000 over the quarter, and the ILO unemployment now stands at 8.2%. However, The Claimant Count measure of unemployment – which records the number of people claiming Job Seekers’ Allowance – rose by 8,100 in May.

MPC minutes

Although the MPC voted to hold steady on asset purchases, the committee was finely balanced, with four members in favour and five against. The minutes also suggested that the majority of members felt more QE would be warranted in the future.

Retail Sales

The value of retail sales was 3.3% higher in May 2012 than in May 2011. Sales volumes also rose, by 2.4% over the year.

The week ahead

Thu 28th: GDP; Business Investment; Balance of Payments

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