NEWS 6 HYDRAULICS & PNEUMATICS November/December 2024 www.hpmag.co.uk The recent UK budget has left manufacturing leaders weighing a complex mix of immediate financial challenges against longer-term strategic gains. In an economic environment that demands both fiscal responsibility and growth, the Chancellor’s new budget includes measures to increase costs for businesses, particularly through changes to Employer National Insurance contributions, while introducing commitments that could support the industry’s long-term development. Stephen Phipson, Chief Executive of Make UK, acknowledged the budget’s difficult balancing act, pointing out that while there is a clear focus on improving the economic landscape, the increase in Employer National Insurance contributions—alongside threshold changes and other cumulative employment costs—presents immediate challenges, especially for small and medium-sized enterprises. These cost pressures, he noted, come at a time when employment-related expenses, such as the National Living Wage and the UK Budget 2024: Manufacturing leaders respond to National Insurance hikes and Industrial Strategy commitment apprenticeship levy, are already climbing. Verity Davidge, Make UK’s Director of Policy, expanded on these concerns, suggesting that these increases could make employers hesitant to recruit, limit wage growth, and potentially lead to job losses. She warned that the “cumulative increase will send employers’ costs soaring,” a development that may deter some businesses from investing further in their workforce. Despite these financial pressures, industry leaders have welcomed some of the government’s broader initiatives, particularly the long-term commitment to a UK Industrial Strategy. Phipson remarked that this focus on industrial growth marks a shift for the UK, which has traditionally lacked a dedicated, sustained approach to manufacturing policy. The promise of a consistent industrial strategy, he suggested, could transform advanced manufacturing into a key driver of regional and national growth, offering the potential for increased investment and high-quality employment opportunities across the sector. Phipson urged the government to expedite the establishment of the necessary sector groups under the Industry Strategy Council, believing these will be essential to developing actionable plans. Another area of support lies in the newly introduced Corporate Tax Roadmap, which aims to bring predictability to tax policy for UK manufacturers. This commitment to a consistent tax approach is expected to offer businesses greater confidence in making long-term investment decisions. Fhaheen Khan, Senior Economist at Make UK, expressed that this stability could encourage manufacturers to invest in productivity-boosting initiatives, particularly within high-growth sectors such as automotive, aerospace, and life sciences. He emphasised that maintaining a careful balance between tax burdens and incentives for investment and innovation will be essential in promoting sustainable growth. Further optimism was sparked by the government’s decision to continue funding the Made Smarter programme, which has become a significant resource for small and medium-sized manufacturers in adopting digital technologies. Make UK’s Digitalisation Lead, Nina Gryf, described the programme as “the only initiative proven to be effective in helping smaller manufacturing businesses boost productivity.” She pointed out that, in a landscape where access to digitalisation support can be fragmented, Made Smarter offers critical guidance and resources that many SMEs rely on to make their first steps into automation and advanced technology. The budget leaves UK manufacturers with a blend of rising operational costs alongside measures that could bolster the sector in the coming years. While leaders are apprehensive about the impact of increased employer contributions and other expenses, they remain cautiously optimistic that the government’s longterm industrial strategy, tax stability, and continued digital support will provide a strong foundation for growth, innovation, and productivity across UK manufacturing.
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