What does the Manufacturing sector stand to gain from this Autumn Statement?

£4.5bn support over the next five years:

The Chancellor announced a further £4.5bn funding for strategic manufacturing sectors for five years from 2025. It will support the transition to clean energy (carbon capture, utilisation and storage, electricity networks, hydrogen, nuclear and offshore wind) together with development of cutting edge technology including automotive (particularly electric vehicles, their batteries and supply chains), aerospace, and life sciences sectors.

New sources of finance for advanced manufacturing:

The Chancellor has clarified the Government’s priorities for the UK Infrastructure Bank to ensure the Bank is able to invest in critical supply chains where it meets the Bank’s strategic objectives, including semiconductor manufacturing and critical minerals.

New Investment Zones:

The government has confirmed the next set of Investment Zones in Greater Manchester, the West Midlands, and the East Midlands; and doubling the flexible funding envelope for each Investment Zone from £80 million to £160 million by extending the programme and associated tax reliefs from five to ten years.

• The Greater Manchester Investment Zone will focus on advanced manufacturing and materials
• The West Midlands Investment Zone will focus on advanced manufacturing
• The East Midlands Investment Zone will focus on green industries and advanced manufacturing

Permanent full expensing:

The Chancellor has made the ‘full expensing’ tax break permanent to incentivise business investment, hailing it as the ‘single most transformative move’ by the Government to drive productivity and growth.

This will provide stability for longer-term planning, and enable 100% deduction from profit for qualifying plant and machinery (50% for special rate items) when calculating corporation tax and is especially valuable for companies spending more than £1m in capital expenditure.

However, the scope of this only benefits companies, leaving out unincorporated businesses, smaller high street establishments, pubs, restaurants, and self-employed individuals who play a crucial role in sustaining UK’s economy.  The current setup also does not create a conducive environment for entrepreneurs to start their businesses.

Apprenticeship growth sector pilot:

The government is committing £50 million to deliver a two-year apprenticeships pilot to explore ways to stimulate training in growth sectors including manufacturing, and to address barriers to entry in high-value standards.

Extension to British Business Bank’s Future Fund Breakthrough Programme:

The government will extend the Future Fund Breakthrough programme, which will provide at least £50m to help the UK’s most intensive R&D companies to scale up.

R&D Tax Relief

The Chancellor today rolled out a new, ‘simplified’ form of the R&D tax relief, combining the existing expenditure credit and SME schemes, heralded as a measure to simplify R&D tax relief and encourage more claimants.

In reality, this was a stealthy move by the chancellor to further reduce the vital tax reliefs available to innovative SME’s. There will still be two schemes with the new “single scheme” and an additional scheme for R&D intensive business’, with many companies worse off than they would have been under the previous SME scheme. The good news is that the government has at least recognised the value of R&D intensive companies who will receive a higher R&D tax credit rate and be open to some 5,000 more SME’s with the definition of R&D intensive being reduced from 40% to 30%”

Expansion to Made Smarter Adoption programme:

The government is expanding the Made Smarter Adoption programme, helping more manufacturing SMEs adopt and use advanced digital technologies, which will also include digital internships.