Intelligence Briefing 3rd September 2015

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In this issue: Weekly Focus: EEF publishes Innovation Monitor Report | Business Energy Efficiency Taxation Review | EEF seeks member involvement to research manufacturing productivity | EEF calls for bolder action to reform environmental legislation | Briefing of new MPs continues apace | In the Media | Week in Review | The week ahead | Blogs this week                                               

Weekly Focus: EEF publishes Innovation Monitor Report

On 24th August, EEF published its annual Innovation Monitor survey, in partnership with Vodafone. The report paints a dynamic picture of UK manufacturing. Companies in the sector are using innovation to move into new markets, satisfy their customers, boost productivity and much more; innovation is key to enabling UK manufacturers to compete on a global stage.

However, the report also highlights the many challenges innovative manufacturers have along the route to achieving successful outcomes. In particular, it raises the impact that a lack of resources can have on manufacturers’ ability to achieve what they wanted from innovation. Manufacturers cite a lack of access to expertise, specialist equipment and external finance as key resources they would have liked to use, but did not have access to.

This matters for manufacturing. Though most companies in the sector do think they are innovating enough to compete, a growing minority do not think this is the case: this year’s Innovation Monitor survey shows that 28% of manufacturers are concerned that they are falling behind competitors due to their level of investment in innovation, up from 26% in 2014 and 19% in 2013.

The report shows that government support helps manufacturers to overcome these resource gaps – in particular – to access skills and expertise, but it also helps them innovate more effectively in other ways. Government support helps manufacturers to help themselves, by easing the process of collaboration with universities, other manufacturers and other potential partners. EEF and Vodafone will be publishing a further report on manufacturers’ views of government support in October.

For further information please Felicity Burch, Senior Economist

The report is available here >

Business Energy Efficiency Taxation Review

Over the summer EEF has continued its engagement with government on the ongoing Business Energy Efficiency Taxation Review. This included a roundtable event at the end of August with HMT, BIS and DECC officials where the latest government thinking was presented. HMT confirmed its core principles for the review were;

  • That the review will aim to be tax neutral for business;
  • Regulatory simplification;
  • The review will protect energy intensive industry;
  • The review will aim to improve energy efficiency outcomes.

Whilst no decisions have yet been made and the consultation will remain fairly open on the issues, HMT are keen to look at: the continued operation of Climate Change Agreements, redressing the imbalance of policy costs between electricity and gas and the introduction of a new energy efficiency incentive.

EEF will shortly be publishing a report that lays out its initial views on reform and has already fed these into government. It is anticipated that a 12 week consultation will be published at the end of September.

For more information contact Richard Warren, Senior Energy & Environment Policy Adviser

EEF seeks member involvement to research manufacturing productivity

Are you a small firm willing to get involved in EEF research on productivity in manufacturing? The government’s Fixing the Foundations report released in July is a positive first step toward tackling the UK’s weak productivity performance implied by official statistics. To ensure the debate has far greater clarity, and focuses more on what businesses themselves can do to boost their own levels of productivity through tangible actions, EEF will shortly consult its members to develop a view of productivity from manufacturing’s perspective.

The consultation will include seeking information about how manufacturers measure productivity at the firm level, how they view their productivity compared to others, why improving productivity matters to individual businesses, and whether they recognise the story implied by official statistics.

If you would be interested in taking part, please contact Zach Witton, Deputy Chief Economist or call 0207 654 1514.

EEF calls for bolder action to reform environmental legislation

EEF last week published its paper calling for widespread reform of environmental legislation. The publication coincides with the ongoing government consultation on how to cut red tape in the energy, waste, farming and mineral sectors which forms part of a wider government drive to cut the cost of regulation to business by a further £10 billion.

However, the findings of an EEF survey, detailed in the report, shows that government progress in this area to date has not been satisfactory.

  • Seven in ten manufacturers say that cutting back on ‘green’ legislation is important to their business, but less than one in ten say that red tape culls to date have saved them time (7%) or money (9%).
  • Four in ten (41%) think that government has not gone far enough in challenging the burden of environmental red tape – just a quarter (25%) think efforts have had the right focus.
  • Attempts to reform ‘green’ red tape have been ineffective because they focus on the UK, rather than the EU where the majority of legislation originates, say over a third of manufacturers (37%).

EEF has made a number of key recommendations aimed to ensure this new review delivers on its objectives for manufacturers and will now work closely with the Better Regulation Executive, Defra and the Environment Agency to progress these.

For more information contact Susanne Baker, Senior Climate & Environment Policy Adviser

Briefing of new MPs continues apace

As part of EEF's ongoing engagement with new MPs from all parties, we held a meeting with Rebecca Long-Bailey MP, Labour MP for Salford and Eccles in her constituency. We briefed her on the state of the manufacturing sector both nationally and regionally, and discussed a wide range of local manufacturing issues relating to skills, industrial strategy, and devolution. We will continue to engage with new MPs on important manufacturing issues in the coming months.

For more information contact Rocky Lorusso, Head of Government Affairs.

In the media

EEF’s response to the latest trade data was widely reported by BBC News, The Financial Times (£), The Daily Telegraph and The Guardian. Chief Economist Lee Hopley was also interviewed on Sky News. EEF’s comments on the latest GDP data were widely reported by The Guardian, The Independent, and The Financial Times (£) and our research findings on the impact of the slowdown of the Chinese economy were featured in the Sunday Telegraph, The Observer and the Daily Mail.

We also published our Innovation Monitor this month, which was reported in The Daily Telegraph, The Independent and on BBC Radio 4.

In environmental news, our response to the Government’s changes to shale gas planning applications was reported in The Financial Times (£). Our comments on DECC’s Feed in Tariff review featured in The Guardian and Senior Environment and Climate Policy Adviser Richard Warren was interviewed on Sky News.

In skills and employment news, EEF’s response to the Government’s consultation on an apprenticeship levy featured on BBC News. Our response to the Government’s gender pay reporting plans featured in The Financial Times (£) and pour Head of Employment and Skills Policy Tim Thomas was interviewed about EEF’s research findings on the gender pay gap on BBC News. Our response to this year’s GCSE results appeared in The Guardian.

For more information contact Sophie Carroll, External Affairs Executive

Week in review

GDP (Q2, second estimate)

ONS confirmed that the UK economy grew by 0.7% in the Q2 2015. Within this, however, manufacturing output contracted by 0.3%.

Business investment

ONS data showed that Business Investment increased 2.9% in Q2, after increasing by 2.0% in Q1.

Manufacturing PMI

The manufacturing PMI eased back to 51.5 in August, from 51.9 in July. Although this marks nearly two-and-a-half years of expansion, this month’s level is well below the average for this period (54.2).

The week ahead

9th Sep: Index of Production
10th Sep: UK Trade

Blogs from this week

03 Sep 2015
Manufacturing in focus - Today's guest blog is from Ian Isaac, Managing Director of Lombard.

02 Sep 2015
Happy, healthy and productive - The benefits of workplace wellbeing - EEF's Mike Denison looks at the important of the benefits of workplace happiness.

01 Sep 2015
Consumers hold the fort for UK manufacturing - EEF’s Deputy Chief Economist discusses how, amid global uncertainty, consumer-driven domestic demand remained the backbone of UK manufacturing.

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