Spring Budget 2017: Government’s optimism mirrored by the plastics industry

Following the Chancellor’s Spring Budget, BP&R looks at what the announcements mean for the plastics and wider manufacturing industries.

In delivering his first budget as Chancellor, Philip Hammond upgraded the Government’s economic growth forecast from 1.4 percent to two percent for the coming year.

This optimism, according to Philip Law, Director-General of the British Plastics Federation, is mirrored by the plastics industry, with the findings of its latest business conditions survey – published yesterday – showing member firms predicting an increase in sales in the next twelve months.

It was a Budget that provided a clear link between education and productivity, which have long been recognised as important pillars for the UK’s manufacturing future.

Business Rates

There was less optimism, however, around business rates, with industry and business bodies giving a lukewarm reaction to the announcement of the £435m to be put aside for firms worst hit by increases in the tax.

The British Chambers of Commerce said the measures were “little more than a sticking plaster” for a system that needed “radical changes” and Mike Cherry, Chairman of the Federation of Small Businesses said although the new money was “a direct and much needed response” to those firms facing hikes in their rates, that fundamentally the tax is out of date.

“Business rates remain a big concern for our member firms and we will be cautiously waiting for the consultation on their reform,” added the BPF’s Law.

Transport and Infrastructure

Following the EEF’s National Manufacturing Conference on 23rd February, during which the need for sound infrastructure and road networks were highlighted to create an accessible and reliable manufacturing base across all regions, the announcement of £90m towards transport spending for the North of England and £23m for the Midlands was welcomed.

“The plastics industry is well distributed throughout the UK, with some hot spots in the North and the Midlands, so we see the announcement of transport spending increase in these areas as a big help for the functioning of the sector,” commented Law.

Training and Education

In what some are calling “the biggest overhaul to qualifications for 70 years”, there was praise amongst the UK’s manufacturers for the Chancellor’s planned creation of ‘T-Levels’, technically-focused qualifications set to provide a “viable alternative” to University education and provide a much-needed skills boost to the manufacturing industry.

“Technical education and clear career paths are critical to ensure the long-term success of UK manufacturing in the age of ‘Industry 4.0’. It is helpful that the Chancellor has taken some steps with this focus on education for the future of the industry,” commented Stephen Cooper, Head of Industrial Manufacturing, KPMG.

The new technical qualification will give students the option to choose from 15 vocational subjects after GCSE, including Manufacturing, which will provide 900 hours of training, an increase of 50 percent.

The Chancellor said that once fully rolled out, the Government will commit £500m a year to the new qualifications.

“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,” said Tim Thomas, Head of Employment & Skills Policy at EEF.

“Government must now ensure this is truly new funding to the skills system and that the technical qualifications which result are designed and demanded exclusively by employers of all sizes.”

R&D Tax Regime

In a further commitment to making the UK more attractive for R&D, Hammond announced a reduction in administrative burdens around the scheme following industry calls.

Philip Law said for the plastics industry, simplification in administrative burdens surrounding the R&D tax regime is something that “members will find useful.”

Funding after Career Break

Following the Chancellor’s announcement of £5m funding to support people returning to work after a career break, as well as increasing the number of paid-for childcare hours, KPMG’s Cooper said he was “encouraged” to see the measures announced, and is hopeful that they will go some way to improving gender diversity in manufacturing.

“It’s vital that at every level, of education and industry, we remain fully committed to encouraging diversity of all kinds, not just gender,” he added.

“A solid foundation”

Concluding, Terry Scuoler, Chief Executive of EEF, said: “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.”