On Monday, Prime Minister Theresa May gave the key note opening address to the CBI’s Annual Conference, outlining her vision of a modern industrial strategy to help boost the UK’s economic growth and productivity levels. In ADS’ blog post yesterday, my colleague Elizabeth Gwilt summarised all of the announcements from the PM’s speech and from the Dept for Business, Energy and Industrial Strategy (BEIS) – including the new ‘Industrial Strategy Challenge Fund’.
However, tomorrow is the first chance for Chancellor Philip Hammond to set out the Government’s approach to economic policy, seeking to put Theresa May’s vision into practice. ADS’ own submission to Treasury ahead of the Autumn Statement has chimed with much of what the Prime Minister outlined yesterday, and has asked the Chancellor to take steps in order to improve the UK’s competitive advantage and its ‘value proposition’ to global investors.
Yesterday, the Prime Minister stated in her speech:
“We are an open, competitive, trading economy. We compete with the best in autos, aerospace and advanced engineering”.
For ADS, continued support for the success of sector based industrial strategies is key to maintaining these high levels of competitiveness. Initiatives such as the Aerospace Technology Institute (ATI) give certainty and clarity to investors that the UK is serious about supporting high-tech sectors such as Aerospace, but it also allows a long term strategic approach to be taken. This helps to ensure the next generation of technology is developed on these shores. In addition, the sector based industrial strategies currently in place are helping to accelerate investment in local productivity growth – with initiatives such as NATEP reaching over 250 companies so far, and with 74% of its participants outside of London and the South East.
In the wake of Brexit uncertainty, boosting funding for the ATI in particular will help to leverage even greater levels of local investment – supporting large companies, their supply chains and growing SMEs, to fund, develop and successfully bring new technology to market.
Another key area where the Government can send a strong, global signal in the Autumn Statement that the UK is open for investment, is through tax reform. The government’s increase of R&D tax credits – from £1 billion to almost £2.5 billion a year – has been an extremely welcome move. However, in order to further compliment this announcement, the Government should look at reforms such as raising the Annual Investment Allowance (AIA) and re-introducing the Industrial Buildings Allowance.
As global Aerospace production rates in particular continue to rise, the need for companies throughout the supply chain to invest now, in order to meet demand, is vital. However, following the EU referendum, many SMEs have indicated their hesitation in making capital investment decisions until clearer signals are received from larger customers and OEMs. As Brexit uncertainty continues, allowing companies to claim back on plant and machinery investments up to £500,000 (which whilst increased last year, is set to expire soon) and on investments in facilities and infrastructure, which helps to expand capacity, will be important in ensuring UK companies are able to showcase both their willing and ability to meet the rise in opportunities which may come their way.
Measures such as those signalled above, building on the positive announcements made yesterday by the Prime Minister, will positively influence short term investment decisions, ensuring our economy and the sectors critical to its future growth, maintain their momentum.
