Industrial Strategy a welcome step but more detail needed, says MHA

The government’s long-awaited industrial strategy, announced earlier this week, will be “broadly welcomed” by the region’s manufacturing firms, according to a leading advisor to the sector.

However, Ginni Cooper, partner in the manufacturing team at accountancy and advisory firm MHA, which has offices in Preston and Lancaster, believes many questions still need to be answered.

These include how the tax burden on manufacturing businesses can be reduced and how Britain will strengthen its trading relationship with Europe.

MHA released its own manufacturing report earlier this week to coincide with the government’s industrial strategy. This found that investment in technology, skills and infrastructure were also big priorities for the region’s manufacturers.

Ginni added: “This week’s announcement on the government’s industrial strategy will be broadly welcomed by UK manufacturers as it addresses many of the key challenges that the sector has faced over a number of years, including assistance in upskilling staff, reducing regulatory burdens, attracting global talent and boosting R&D. However, until there is more detail on how these challenges will be addressed, a level of uncertainty will remain. 

“One of the key issues which has been highlighted is the reduction in energy costs and an acceleration in grid connections. This has been an ongoing concern for the UK manufacturing industry and while this cannot be changed overnight, it is disappointing to hear that the price reductions will not come into play until 2027. 

“A fundamental challenge for the UK is its dependency on gas imports, which are driving market prices. The alternatives are to shift to renewable energy or nuclear similar to France and Germany, where prices are lower.

"The difficulty with solar and wind is the storage and investment that is required, so the best option may be to lower the demand for gas. The strategy does state that this investment will be funded by reforms to the energy system, but, as yet, there is no clarity are what these reforms will be. 

Ginni added: “Another issue that has been highlighted is the tax environment. In our latest manufacturing report, which gathered views from 1,000 CEOs and business owners, the majority of respondents said that the biggest current challenge facing their businesses are the tax increases announced by the UK government in October 2024, which have significantly increased their wage bill as well as creating uncertainty around investment. 

“While the strategy recognises that more needs to be done to simplify and reform the tax environment to support businesses, it is likely that the earliest we will hear any changes will be in this year’s budget.

"Survey respondents also commented that implementing the details of recent trading announcements and improving relationships, particularly with Europe, which remains difficult and bound in red tape, also needs to be addressed as soon as possible.  

“While the Industrial Strategy is lacking some detail, as our report showed technology, skills, infrastructure and the ability to access investment were all listed as key priorities for manufacturers, and it appears that the government has heard and is moving in the right direction to support the industry.”