Spring Statement and manufacturing: measures announced today don’t help the sector against a wave of forthcoming tax and prices increases.
Following the Spring Statement, Chris Barlow, partner at MHA, believes the Chancellor failed to address the needs of manufacturing businesses in the wake of increasing inflation, energy prices and taxes:
“While Rishi Sunak would like to be known as a Chancellor who reduces taxes, the Spring Statement was a missed opportunity to help manufacturing businesses facing an onslaught of increases ranging from inflation to tax rises. Some of the reliefs and tax cuts announced today sounded impressive but pale into insignificance when you consider the barrage of tax increases on the way.
“The increase in the National Insurance (NI) threshold will provide some relief but scrapping the NI increase of 1.25% was the manufacturing industry’s big ask and this will go ahead despite pressure by businesses to postpone it. The increase to the Employment Allowance is welcome, but will not go far enough to offset other increases, including rises in prices, the planned Corporation Tax rise (in April 2023) and the end of capital allowance reliefs in April 2023.
“On a positive note, the long overdue review of the apprenticeship levy announced by the Chancellor in his ‘new tax plan’ is a welcome move. Focus on training is vital and the skills challenge has dogged the sector for many years, seemingly without solution. Part of the solution must be to involve the sector itself to ensure the right voices are heard. Answering the skills question is the top of the manufacturers’ wish list. In its current form R&D relief works well, (arguably it has cost the Government more than they had planned). The chancellor needs to resist tampering with this vital relief.
“Rishi Sunak ended with a promise to reduce Income Tax by the end of the parliament in 2024. A bold statement in the current circumstances which sounds like a pre-election soundbite. The key will be the intervening period when business will want to see much more in the way of assistance to allay the oncoming wave of increases.”
This article is a part of our dedicated Spring Forecast Statement Hub. For more analysis and insight, please click here.
