Autumn Budget Opinion: A Mixed Bag of Outcomes for Manufacturers

There were winners and losers in the manufacturing industry from Rachel Reeves’s Autumn Budget.

There was further formalisation on the commitment to introduce an industrial strategy which also includes SMEs and significant spending commitments for aerospace, automotive and life sciences. Hopefully, this will encourage much-needed overseas investment that the UK manufacturing sector requires to allow it to grow to its full potential.

The announcement on a further commitment to skills has come as welcome news. The shortage of skills has been a perennial Achilles heel for manufacturers for years. It is hoped that this will plug the widening skills gap that the manufacturing industry faces.

However, employers have been hit. The increase in employer National Insurance Contributions and the significant rise National Minimum Wage will have a knock-on effect and therefore have a considerable impact on businesses.

Business owners have also been impacted by the changes to Business Asset Disposal Relief although the £1m threshold has been held meaning that it was not as bad as had previously been feared. The changes to Business Rates Relief will again impact business owners as will bringing Pensions into Inheritance Tax thresholds.

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However, there were some real missed opportunities. There were no changes to R&D or Capital Allowances. The former is a real missed opportunity (the new regime is too hard when looking at relief for smaller entities). Capital Allowances already work relatively well.

There were no changes announced to corporation tax which is still relatively high compared to our Irish neighbours.

There were also no announcements on dealing with Europe post-Brexit which remains a significant challenge for manufacturers particularly when it comes to challenges with supply chains.

Yet, as always, the devil will be in the detail as and when it is released.