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Budget reaction: ‘sizeable gains’ for UK manufacturers?

20 March 2014

Responding to the Chancellor’s Budget, Phil Orford, chief executive of the Forum of Private Business, believes energy policies and export will provide sizeable gains for UK manufacturers over the next few years.

“On export the Chancellor has thrown his weight behind getting more businesses exporting,” he said. “Our membership is confident about growth but much of that growth is UK based so we needed to see such a commitment, though we will continue to work with the Treasury and others to develop even healthier export subsidies for business.

“This was a budget that offers some help to all levels of business, with perhaps a slight focus on the mid size energy intensive and manufacturing businesses, rather than the very small ones. However, it does help to tackle the cost of energy and makes good on the commitment trailed before the Budget to support those that look to invest, either in the UK – with a more extensive Annual Investment Allowance –  or abroad, with a £3billion export support budget.

“Overall, the Budget, combined with the more cost measures to help small businesses announced in the Autumn Statement, sent out a positive message to invest and grow in the year ahead.”

On export, the Government said it will overhaul UK Export Finance’s (UKEF’s) direct lending programme, doubling it to £3bn and cutting interest rates to the lowest permitted levels to provide competitive financing that helps UK firms win contracts and expand overseas.

“Exporting was a central theme in today’s Budget as the Government continues to encourage a balanced recovery,” continued Orford. “The package of support announced today will help UK businesses looking to export, particularly those who have struggled to secure export finance. Driving awareness of UKTI and UKEF is as important as increasing the availability of finance and the commitment to increase marketing of UKEF’s products and services is welcome.”
On apprenticeships, the Government said that the AGE grant will be extended to December 2015 to support 100,000 additional apprenticeship programmes and from January 2015 the AGE grant will be exclusively for small employers (fewer than 50 employees).

Orford described the proposal as ‘a central ask of our budget submission’ adding that it ensured small businesses have the skills they need that are essential to creating sustainable growth. “Small businesses’ access to apprenticeship programmes must continue to remain at the forefront of the Government’s mind as it proceeds with its programme of apprenticeship reform,” he added.

On R&D Tax Credits, the Government announced that from April 2014 it will increase the rate of the payable credit to loss makers from 11 per cent to 14.5 per cent. A loss making SME investing £100,000 in qualifying R&D will be able to claim a cash payment of £32,600; £7,800 more than under the existing scheme.

Orford said: “This is obviously a more generous scheme rate than previous. We are interested to see how a government can take the successful R&D scheme and apply it to export, which is where future growth needs to come from.”

“The Forum is particularly delighted to see action in the area of deeds of priority. These can hold up businesses wanting to access finance away from their primary lender. This process looks as though it will be speeded up dramatically and is a key plank for encouraging businesses towards alternative sources of finance.

“Finally, allowing ISA investors to invest in peer-to-peer finance is a further solid and welcome measure to support this industry.”

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