Intelligence Briefing 3rd March 2016

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In this issue: Weekly Focus | Budget build-up | Labour relations | In Parliament | In the media | Week in Review | The week ahead | Blogs from this week

Weekly Focus

EEF’s submission ahead of the Budget calls on government to focus on improving the cost competitiveness of the UK business environment and to support businesses to take advantage of the big technological opportunities that could deliver a step-change in the UK’s productivity performance.

With a range of new policies under consultation that could add to the burden on manufacturers it is vital that the Budget statement on March 16th outlines how the new apprenticeship levy, the business energy tax review and the outcome of the review of pensions tax relief will be implemented to avoid damage to the competitiveness of UK industry. Our recommendations include:

  1. Apprenticeship levy: We have set our six clear red lines that must be satisfied on the implementation of the new levy. Any failure to clearly satisfy these red lines will result in the levy being seen, rightly, as another business tax.
  2. The Business Energy Taxation Review should scrap the Carbon Reduction Commitment with revenues recouped through the Climate Change Levy. Climate Change Agreements should remain in place for the current phase with higher discount rates to compensate for Climate Change Levy increases.
  3. Confirmation should be given that there will be no rise in the Carbon Price Floor in 2020 and it should be scrapped as soon as possible after this date.
  4. Employer tax relief on pension contributions must not be reduced in this Budget. The prospect of a future cut is already dampening employers’ plans to invest and grow. An actual cut would add to the potentially damaging collective of business costs the Government has already announced.
  5. Given the current crisis in the steel sector, Class IV plant and machinery should be immediately removed from the calculation of rateable values for business rates purposes and additional safeguards should be put in place before business rates are devolved to local areas.
  6. The business tax roadmap should aim to reduce the tax wedge on employment and align tax reform with technologies that will boost productivity – these include capital allowances, business rates and the R&D tax credit. The roadmap should also outline how it will engage with the wider business community in the process of tax policy making and consultation.
  7. Government’s focus on productivity should be further developed by:
  • Expanding the new Roads Fund to cover local road improvements
  • Implementing the Airports Commission’s recommendation for an additional runway at Heathrow airport
  • Increasing core funding for new Catapult Centres
  • Developing a long term coherent energy strategy.

Budget build-up

EEF has continued to press home key budget submission messages ahead of March 16. Members joined EEF chairman Martin Temple for a briefing and dinner with Greg Hands, the Chief Secretary to the Treasury, to discuss priorities for manufacturing. And EEF Chief Executive Terry Scuoler met with Business Secretary Sajid Javid to reinforce EEF’s ‘red lines’ regarding the forthcoming implementation of the apprenticeship levy, pension reform and support for the steel industry.

For more information contact Hywel Jarman, Director of External Affairs

Labour relations

The Labour Party’s shadow minister for trade, investment and property, Kevin Brennan, met with EEF to discuss industrial strategy and budget issues. Mr Brennan, the MP for Cardiff West, was briefed on EEF’s budget submission, covering proposals to ensure the effective implementation of the apprenticeship levy, the business energy taxation review, where EEF is calling for no net increase in energy taxation, and support for the steel sector. Mr Brennan, whose brief includes trade, is keen to hear views from members of EEF about experiences with UKTI.

For more information contact Celia Charlwood, Government Affairs Adviser

In Parliament

In a debate about European Affairs, Damian Green MP mentioned the debate which he took part in at the National Manufacturing Conference saying:

“The Foreign Secretary is advancing the case of the economic benefit of Britain’s membership of the European Union, and he may like to hear the verdict from Britain’s manufacturing industry. Yesterday, at the Engineering Employers Federation, I took part in a debate with a senior member of the Vote Leave campaign, at the end of which 800 of Britain’s manufacturing companies voted by 82% that they would prefer Britain to stay in the European Union. That is what is happening in the real world among real people who make real things for Britain’s benefit.”

In a written Parliamentary response on manufacturing industries, the Minister of State for Small Business, Industry and Enterprise, Anna Soubry, mentioned that she had spoken at the EEF National Manufacturing Dinner and that Sajid Javid had spoken at the EEF National Manufacturing Conference.

Separately, EEF’s Chief Economist Lee Hopley gave evidence to the Business, Innovation and Skills Select Committee as part of their inquiry into exports and the role of UKTI.

The Business, Innovation and Skills Committee is an influential committee of MPs responsible for making recommendations to Government on business policy. The Committee are currently investigating how Government can help smaller businesses to export more.

They have asked EEF members to help them improve Government support for business by taking five minutes to complete a short survey that will inform their work.

The Committee will also be holding a free half-day workshop and lunch on 21 April in Derby, and will be inviting a selection of respondents to attend.

This is a real opportunity for EEF members to have their voices heard directly by those who influence Government policy, so we really encourage you to participate in the survey and sign-up for the workshop. If you are interested in attending, please complete their survey by 17 March.

For more information contact Rocky Lorusso, Head of Government Affairs

In the media

Coverage of the National Manufacturing Conference continued to dominate, mainly focussed on the EU debate and the outcome of the interactive vote amongst delegates, in which 82% voted to remain in the EU and 13% voted to go.

This generated a particularly thought-provoking piece in The Evening Standard, written by the veteran commentator, Anthony Hilton – see here

Elsewhere, journalists were more interested in poking fun at the Business Secretary, Sajid Javid, for a mispronunciation during his speech at the conference.

Other key stories to make national news were the ‘Labour trident row’ after Tom Watson, Deputy Leader of the Labour Party told the conference that he was in favour of trident – see here – and Sajid Javid’s announcement of a business broadband review, an EEF policy ask.

Apart from the conference, EEF continued to gain regional and trade press coverage with its online Apprenticeship Matching Quiz – see here – while its recent report on productivity and technology, in partnership with Infor, continued to generate media interest.

For more information contact Jo Ganly, Head of PR

Week in review

Manufacturing PMI
(February)

The manufacturing PMI shed just over 2 points compared with January, dropping to 50.8, or the lowest since April 2013. However, it remains above 50 – the reading that marks the difference between expanding and contracting activity levels.

Consumer confidence (February)

The confidence index fell four points to 0 in February. The decline mainly reflected a decline in confidence in the country’s general economic situation.

The week ahead

9th March: Index of production

Blogs from this week

29 Feb 2016
EEF’s 2016 Budget Submission by Chris Richards

29 Feb 2016
Week ahead 29 February by Zach Witton

03 Mar 2016
Better supply of finance to SMEs fails to spur demand by George Nikolaidis

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