This blog forms part of a series of guest blogs on investment. You can follow the debate on twitter with the hashtag #bizinv
Chris White is MP for Warwick and Leamington and is the co-chair of the Associate Parliamentary Manufacturing Group
You can follow his tweets via @ChrisWhite_MP
Over the past two years, manufacturing has become one of the central planks of the Government's efforts to get the British economy back onto a path of sustainable growth. It is hardly surprising, as the co-chair of the Associate Parliamentary Manufacturing Group, that I believe this is to be the right move.
While a great deal of manufacturing success is down to the efforts and decisions of business, the Government has a role to play in creating an environment in which manufacturing can thrive – a point which was highlighted in Lord Heseltine's growth review. Signals from Government can have an important impact on the plans of businesses, creating confidence and stimulating growth – and this Government needs to send a strong signal to business to invest for the future.
The UK is facing a significant productivity challenge. According to the latest figures, competitors such as the US, France and Germany all have large advantages in terms of productivity, and unless the UK is able to reduce that productivity gap, UK businesses will find themselves at a competitive disadvantage. The only way to reduce that is to encourage investment in new equipment, more research and development and better skills.
The Government can send the right signal to encourage investment by increasing capital allowances in the Autumn Statement to 100% for two years – a policy which has been championed by EEF for many years. This will give an incentive for manufacturers to invest in the future and give a valuable boost to our economy. We also need a long term review into our system of capital allowances. According to research by Oxford University, the UK ranks 28th in the world for allowances for plant and machinery and 41st in capital allowances for industrial buildings – this is simply not good enough.
We also need greater urgency in infrastructure investment. The UK ranks poorly for infrastructure quality – 33rd according to the World Economic Forum and excellent infrastructure underpins the competitiveness of countries such as France. Any under spend by Government departments should, therefore, be redirected at infrastructure projects and additional measures should be taken to encourage outside investment.
The Autumn Statement presents an excellent opportunity for the Government to boost manufacturers and create the platform for long term growth. I hope that the Chancellor takes this opportunity.
Please note: these blogs contain the views of the author and are not necessarily those of EEF