What does the spending review mean for your manufacturing business?

The chancellor’s spending review was set out last week and with the significant government expenditure since March it was arguably one of the most anticipated review this year, Made UK has highlighted a four announcements that may be useful to your manufacturing businesses. 

1. Increases to the National Living Wage and National Minimum Wage confirmed

There has been a lot of speculation to a possible increase to the National Living Wage and wider National Minimum Wage rates. As businesses respond to the affects of the pandemic, it was thought that plans for any increases may be shelved given that unemployment is rising month on month. However, the  Chancellor confirmed that the NLW rate will rise next year as will the other NMW rates. What’s more the NLW will apply to those aged 23 and 24 as well as those aged 25 and over. Although not a primary concern for manufacturing businesses that typically employ skilled personnel, the recent pay freeze rhetoric we hear will definitely be felt next year as pay differentials lessen.

2. An extension of the apprentice incentive payments for employers and continuation of Kick Start 

The Job Retention Scheme has undoubtedly helped countless UK businesses facing the effects of lockdown. Unfortunately, due to the last minute extensions, the Make UK’s latest Manufacturing Monitor found that half of manufacturers have made redundancies. 

 The extension of the apprentice incentive payments for employers will be welcomed. Apprentices have always been the lifeblood of many manufacturing businesses and a great entry route for young adults to enter the industry. Due to the pandemic, the number of schemes offered this year has significantly reduced as businesses seek to reduce costs. The impact of this could be significant in the long term with a potential skill crisis risk in the coming years. 

3. Big increases to innovation spending with £14.6bn funding for R&D

The manufacturing sector accounts for 66% of R&D in the UK. The Make UK’s Innovation Monitor 2020: Bouncing Back Smarter found that manufacturers are pressing ahead with their digital journey, with more firms moving from pre-conception phase to revolution phases. If the UK is to become a global leader in the adoption of digital technologies with science and research at the heart of the economy, government investment will be crucial in achieving our goals. If there are any lessons we can take from the progress in finding a Covid vaccination, is it that with the right funding, we as a country can achieve great feats.

4. A major boost for infrastructure and a refocus on local projects to effectively support levelling up

Confirmation of a new National Infrastructure Strategy, a levelling up fund worth £4bn, will allow local areas to bid to fund projects. The need to invest in both physical and digital infrastructure will provide both short and long term benefits to the economy as a whole as well as crucially supporting the rebalancing of our regions.

We have and are advising a number of manufacturing businesses during this period. Whatever lays ahead receiving external advice may be useful, even if it is just a sounding board to confirm what you may know already. We at Polestar are always happy to share our and others’ experience. Please do get in touch.

What manufacturers need to know about today’s Spending Review. Made UK has highlighted a four announcements that may be useful to your manufacturing businesses.

By Bhavik Borkhatria on 30/11/2020