Government must address manufacturing industry issues in budget, says expert

This week’s autumn budget will give the government a prime opportunity to address key unanswered challenges for the manufacturing industry, a leading Lancashire business advisor has said.

Speaking ahead of the new government’s autumn statement on Wednesday (October 30), Ginni Cooper, Lancashire-based partner in the manufacturing team at national accountancy and advisory firm MHA, said the sector had seen recovery in recent months and was benefiting from post-election certainty, but many questions remained around announcements that could heavily impact the industry.

“The S&P Manufacturing PMI has remained above 50 since July this year, suggesting that the sector is now beginning to turn a corner,” said Ginni. “Output and orders are growing, and most significantly, there has been an increase in the workforce for the first time in almost two years.”

Ginni also highlighted the government’s announcement of a new industrial strategy earlier this month had been welcomed by the industry.

She claimed, however, there were major challenges that the government must fix if it wanted the UK to regain its spot within the world’s top ten manufacturers.

“The first is investment. There is growing consensus that the National Wealth Fund could be the impetus that manufacturers need to start investing, but that depends on the fine print; without this detail, there is unlikely to be any movement,” said Ginni.

“The second is skills. The shortage of skills has been a perennial Achilles heel for manufacturers for years and the problem has been exacerbated by preventing the freedom of movement of workers. The announcement last month of the new growth and skills levy was welcomed but without further details, it remains to be seen if this will plug the widening manufacturing skills gap.

“The third is to improve the trading relationship with the rest of Europe. Significant supply chain problems still remain post-Brexit, and the ports are woefully underprepared for the new customs checks that were introduced earlier this year.”

Ginni also discussed the potential impact of wider economic proposals on the manufacturing sector, particularly any changes in the budget to Business Asset Disposal Relief when a business is sold, which would likely be seen as ‘anti-business’.

She said: “This currently requires paying 10 per cent on all gains up to the individual’s lifetime limit (currently £1m). Changes to this would serve as a significant disincentive to investment.”

MHA, ranked the 13th largest accountancy group in the UK, has 20 offices across the UK including Preston and Lancaster. MHA is also the UK member firm of Baker Tilly International, the world’s 9th largest international network of independently owned and managed accountancy and business advisory firms.