Aspiration nation or more of the same? 30 April 2013

So how was it for you? Did last month's speech by the Chancellor strike you as a budget fit for an 'aspiration nation'? Or did it leave you worried that, at least as far as wealth-generating manufacturing industry is concerned, it was still too little, too late?

Yes, there was the £2,000 National Insurance rebate, aimed at improving smaller firms' ability to take on extra staff. As the Chancellor put it: "A company could hire someone on £22,000, or four people on the minimum wage, and now pay no jobs tax at all." That's a £1.25 billion tax break.

So, a tick in the box. And, yes, there was also the cut in the headline rate of corporation tax, to 20% in 2015, which will give the UK the lowest rate in the G20. Another tick.

Then, in terms of industry, there was support for aerospace and a commitment to taking forward two CCS (carbon capture and storage) projects, while also improving the tax regime for shale gas. No doubt, these moves should help boost engineering-led trade and investment.
However, aside from the fuel duty concession and some infrastructure support, what else was there for manufacturing? We all understand the Chancellor's limited room for manoeuvre in austerity, but is this package likely to stimulate British industry to aspire to greater things?

As Michael Last, managing director of Portsmouth-based Formaplex, complains: "The Chancellor has missed a trick in capital allowances. Allowing [manufacturers] to write off 100% of capital cost in the year it occurs would be a simple way to support British industry."

And Dave Bull, director of quality engineering consultancy TEC: "The Chancellor ... needs to do more on skills development. There is little point investing in high tech machinery, if there is no-one able to operate it."

Indeed so. Sadly, the lingering impression is that the Coalition is still failing to support UK manufacturing adequately, remaining instead more committed to the financial sector. And that view is echoed by a poll recently commissioned by the Institution of Mechanical Engineers.

Its survey of 1,000 manufacturers reveals that 61% believe the government is performing badly on manufacturing policy, with only 17% giving it the thumbs up. Additionally, more than one third feel less confident about the future of UK manufacturing than they did just last year.

They're probably right. The eighth national business sentiment survey, conducted by business insurance specialist QBE, shows that only 12% of manufacturers now expect a full recovery within two years, with 83% believing it to be two years or more away.

There is an unfortunate consistency here that is hard to ignore. The fact is, it's going to take more than a few technology Catapults and University Technical Colleges to turn the tide.

Brian Tinham BSc CEng MInstMC FSOE FIPlantE FIRTE

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