Budget 2011
In today’s Budget speech, the Chancellor of the Exchequer, Rt Hon George Osborne MP said that this would be “a budget for making things”.
Osborne said the tenets of his ‘Budget for growth’ were:
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To create the most competitive tax system in the G20;
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To make the UK the best place to start, finance and grow a business;
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To encourage investment and exports as a route to a more balanced economy;
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To create a more educated workforce
Against an economic backdrop of subdued growth and rising inflation, the Coalition had committed itself to announcing growth-enhancing measures that would bring confidence to the economy. Here we set out the key commitments made in the 2011 Budget so you can decide whether this really will be the most pro-growth budget for a generation:
Business
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Corporation Tax reduced by 2% from April 2011, falling by 1% for the next three years;
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Government to consult on merging National Insurance and Income Tax;
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Removal of £350 million worth of regulation on businesses;
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New planning rules to require planners to prioritise growth and jobs with a presumption in favour of sustainable development;
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Income Tax relief on Enterprise Investment Scheme to increase from 20% to 30% in April 2011;
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Small business rate relief holiday extended by one year to October 2012;
Manufacturing & Engineering
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Extension of the capital allowances short life asset regime for plant and machinery from four to eight years from April 2011;
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Establishing 21 new Enterprise Zones to be developed with the new Local Enterprise Partnerships;
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The Government will make permanent the Export Credits Guarantee Department’s (ECGD) Letter of Credit Guarantee Scheme and a facility that allows ECGD’s guarantees to be used to raise long-term finance in capital markets for UK exports;
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Establishment of a High Value Manufacturing Technology and Innovation Centre;
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An accelerated launch of the new enhanced Manufacturing Advisory Service with an additional £7 million to deliver its services over the next three years;
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Investment of £100 million in new science facilities in Cambridge, Norwich, Harwell and Daresbury;
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Small companies’ R&D tax credit to rise to 200% in April and 225% in 2012;
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The Government will fund a programme of new Manufacturing Fellowships to forge links between business and the research base.These EPSRC Manufacturing Fellowships will provide five years’ support for at least six exceptional engineers and technology specialists from business who are able to bridge university and industrial cultures, each leading a £1 million programme of research;
The Institution's response
The Institution was pleased to see planned investment across a range of mechanisms that will all help manufacturing. The investment in Technology and Innovation Centres, university based Innovation Centres, the Manufacturing Advisory Service and the new Manufacturing Fellowships should be applauded. However the devil will be in the detail.
It is essential that hard work continues to make sure that the new Technology and Innovation Centres do not just turn into new Research and Technology Organisations (RTOs). RTOs already exist and while they perform a key function (giving shared access to infrastructure and capital equipment) they are not primarily driven by the need to improve UK competitiveness. TICs must be structured so that they retain innovation and job creation purpose as their main focus. The Institution may well have an active role in providing independent and informed advice from its membership which spans industry, technology and academia.
The Manufacturing Fellowships must be tasked to work with existing businesses and not encouraged to be in competition with them. This is because there is a natural tendency in taking action to create something new rather than try to adjust what previously exists.
Education
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Expansion of the University Technical Colleges programme to establish at least 24 new colleges by 2014;
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Funding for nine new university-based centres for Innovative Manufacturing by 2012;
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Funding for 50,000 additional apprenticeships, 10,000 of which will be higher level, equating to a total of 250,000 over the next four years;
The Institution's response:
The Institution supports the creation of the UTCs and is already working with several to provide support. Linked to this is the importance of continued government support for the 14-19 Engineering Diploma.
We welcome the creation of more places and on the emphasis on higher level apprenticeships which are vital to engineering. Companies see apprenticeships as an investment in growth and skills development, however, adequate funding must also be available to enable companies to offer apprenticeship places.
Transport
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An extra £200 million support for regional railways;
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Implementation of the £85 million Ordsall Chord scheme to link Manchester’s Victoria and Piccadilly stations, reducing journey times between Liverpool and Leeds;
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Commitment to the Swindon to Kemble redoubling scheme to complement the electrification of the Great Western Main Line to Wales;
Low carbon investment
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A floor price for carbon to start at £16 per tonne CO2 and reaching £30 per tonne CO2 by 2020;
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An injection of £2 billion made in asset sales into the Green Investment Bank to supplement the £1 billion announced in the Comprehensive Spending Review, to begin operation in 2012.
In addition to these announcements the Government has announced its intention to promote a new international prize in engineering, working with private sector partners to create an endowment to support the prize.
Download the 2011 Budget