Budget 2017

Spring Budget to boost manufacturers’ productivity

By Gwen Ridler contact

- Last updated on GMT

The Spring Budget will boost productivity and help close the skills gap, claimed the FDF
The Spring Budget will boost productivity and help close the skills gap, claimed the FDF

Related tags: Taxation in the united kingdom

Food and drink manufacturers will welcome plans set out in the Spring Budget to boost productivity, research and development and close the skills gap, according to the Food and Drink Federation (FDF). But the FDF remained opposed to the sugar levy.

FDF director general Ian Wright said it was important that the food and drink manufacturing sector was fully recognised in the new technical qualifications – set out in the budget – and that it would be closely involved in their implementation.

“It was also pleasing to see details of how the £4.7bn from the National Productivity Investment Fund announced at Autumn statement will be invested in science and innovation,”​ added Wright. 

The revision of the R&D​ [research and development] tax credits system was something we had asked government for and we support. Increasing simplicity around the process for claiming R&D tax credits will benefit companies of all sizes – and SMEs ​[small and medium-sized enterprises] particularly.” 

EEF, the manufacturers organisation, said the proposals for technical education would provide clarity for students wishing to enter manufacturing careers.

‘Welcome first step’

Head of employment and skills policy Tim Thomas said: “This is a welcome first step towards finally putting technical and academic education on a truly equal footing.

“It ticks all the right boxes in terms of the emphasis on parity of esteem and the need to radically simplify and streamline the current system of qualifications – which is overly complex and misunderstood by students, teachers and employers.”

EEF chief executive Terry Scuoler said the Budget showed a level of commitment from the government to raising productivity levels in the UK economy.

“While this Budget doesn’t have all the answers to our future growth challenges, the evolution of the R&D tax credit, action on digital infrastructure and regional road networks – together with additional investment in technical skills and lifelong learning – is a solid foundation on which future statements must build,” ​said Scuoler.

The Confederation of British Industry (CBI) also welcomed the budget’s focus on plugging the skills gap, while raising concerns over the limited relief offered to firms hit hard by the rise in business rates.

‘Breakthrough budget for skills’

CBI director general Carolyn Fairbairn said: “This is a breakthrough Budget for skills. There has never been a more important time for the UK to sit at the global top table of technical education for young people.

“With the majority of people who will be working in 2030 already in the workforce now, the focus on adult skills provision will put this type of training on the right path to major and necessary improvement.”

Despite the FDF’s support for the budgets focus on productivity and skills, it still opposed the government’s sugary drinks industry levy, due to the lack of evidence that it would reduce obesity.

However, pressure group Action on Sugar fully supported the levy and urged all manufacturers to reformulate their products to avoid paying the tax. 

“Sugar-sweetened drinks are the biggest contributor of sugar in the diets of children and teenagers and unless they are reduced, these drinks will still contribute to the high levels of obesity, type 2 diabetes and tooth decay, all of which are preventable and cost the NHS billions of pounds each year,”​ it said.

Meanwhile, read how the drinks industry slammed the Spring Budget,​ as tax on alcoholic drinks is set to increase to the highest levels in Europe. 

Spring Budget 2017 – at a glance

  • Class 4 National Insurance contributions will increase from 9% to 10% in April 2018 and to 11% in April 2019 to reduce the gap in rates paid by the self-employed and employees.
  • Increasing the number of programme hours of training for 16–19 year-olds on technical courses by more than 50%, to over 900 hours a year on average.
  • Raising productivity through investment in research and innovation, developing the UK’s skills base, upgrading infrastructure, and encouraging investment.
  • Implementation of the sugary drinks industry levy – 18p for drinks with 5g of sugar per 100ml and 24p for drinks with 8g of sugar or more per 100ml.
  • An increase in alcohol duty rates and bands in line with retail price index inflation.  

Related topics: Drinks, Confectionery

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