EEF comments on the Spending Review

EEF, the manufacturers’ organisation

Commenting on today’s statement by the Chancellor of the Exchequer, Steve Warren, North West Region Director at EEF, the manufacturers’ organisation, said: “The Chancellor’s enthusiasm for an industrial strategy for Britain is hugely welcome, as is his promise to continue to support Catapult centres, the successful incubators of new business ideas and product development. By moving to protect science and research spending, he will give industry confidence and encourage many innovative companies to push ahead with the next generation of business ideas.

“Moving to an exemption of energy intensive sectors from the costs of renewables is enormously welcome and demonstrates that government is dedicated to finding a long term solution to this problem.

“The apprenticeship levy is a blunt instrument, and the Government must work hard to ensure employers are not disadvantaged and that many smaller and medium sized businesses are exempted. What really matters is creating high quality, well trained apprentices who can look forward to successful careers in industry. This cannot be a simple numbers game where businesses are clobbered to pay for apprenticeships. The Government’s approach to this requires a lot more sophistication than we’ve seen so far.”

On Innovation and Catapult funding, EEF Chief Economist, Ms Lee Hopley, said: “Keeping the funding for Catapult centres on a stable footing is great news for innovative businesses across the UK. Maintaining the balance of funding between Government and the private sector will help ensure the UK continues to encourage the kind of collaboration that will help innovators traverse the ‘valley of death’. The priority now is to keep the existing centres at the cutting edge of technology and expand the network as and when additional resources become available.”

On the switch from some grants to loans, EEF Chief Economist, Ms Lee Hopley, said: “Government can grease the wheels of successful innovation with money and by encouraging collaboration across business and the science base. The switch away from some grants may well prove to be a canny move to maintain the number of companies that can be aided with government support and by providing an escalator of funding options. But this needs to go hand in hand with access to the expertise and partnering opportunities that were part and parcel of previous schemes.”

On proposals for the Apprentice Levy, Tim Thomas, Head of Employment & Skills Policy at EEF, said: “Whilst the principle of the levy is not supported by business, the Chancellor’s announcement balances the need to secure future employer funding to invest in quality apprenticeships at a rate that the employers affected can afford.

“However, there are several future challenges which must be overcome before manufacturers can support the new Levy. Employers must be able to control the funding, with the lowest possible level of red-tape. Any level of funding available to employers must allow them to cover the real cost of providing a quality apprenticeship with predictable and stable funding over the long term.”

On Business Rate Devolution, EEF Chief Economist, Lee Hopley, said: “Local authorities have had the power to levy a supplementary business rate, subject to a referendum of businesses, for a number of years now and notably none have. Manufacturers will look in detail at these proposals and judge them against achieving the outcome of delivering a stable and predictable local tax environment. This will help to underpin the confidence businesses need to invest for the long term. A peak and trough tax cycle will erode the already poor relationship that exists between businesses and local authorities.”

On the exemption of Energy Intensive Industries from the costs of Renewables, Gareth Stace, Director of UK Steel, said: “Moving to an exemption of energy intensive sectors from the costs of renewables is enormously welcome and demonstrates that Government is dedicated to finding a long term solution to this problem. This is an extremely positive development. Ever since the Chancellor committed to a compensation package for the costs of renewables support at the 2014 Budget, there has been a significant element of uncertainty regarding its scope, adequacy and longevity.

“With a move to an exemption rather than compensation, Government has ended this uncertainty and we can now look forward to a more level playing field in terms of energy prices for our steel plants. In the short term, however, we still need to receive state aid clearance from the Commission and get compensation payments in place until the necessary arrangements can be made to introduce the permanent exemption, probably in 2017-18.“

On the extension to Funding for Lending, EEF Chief Economist, Ms Lee Hopley, said: “The Chancellor’s announcement to extend the Funding for Lending Scheme for another year is a welcome step towards releasing more and, less costly, finance to businesses at a time when confidence to invest is running low.”