Rishi Sunak would have known before he even stood up on 3rd March that his Budget statement would not please everyone. Hand-outs are never enough or don’t reach the right people. Taxes are seldom seen as fair. But he might just have hit the jackpot with his 130% super-deduction capital allowances scheme.
His overall package signals Government recognition that the best way to stimulate the economy is through making it pay to invest in technology. If companies take the bait, this will lead to improved efficiency which will enhance our productivity. It will also give added impetus to the Government’s green agenda.
Industry seems keen to take up the challenge. A recent report published by The Manufacturer showed that more than two-thirds (67%) of UK manufacturers had accelerated their adoption of digital technologies as a direct result of the pandemic. With only 16% of companies pausing their digital adoption policies because of COVID-19, it was taken as firm evidence that “the majority of businesses now recognise the strong correlation between digital tools and increased productivity, efficiency and resilience.”
But acquiring the latest technology loses its purpose if companies fail to train or retrain their staff. Extending the furlough scheme will certainly be a financial lifeline for some companies, but its other function will be to allow businesses to retain the skills embodied in their existing workforce.
The Budget’s support package for apprenticeships and training takes the initiative an important stage further. Manufacturing and engineering firms need desperately to attract new talent into the sector.
Government and industry are in harmony and, as a result, automation, robotics and digital manufacturing solutions have been given a huge boost. The ultimate prize is to underpin the long-term future of the UK’s manufacturing industry.
This would fit with the Government’s surprise decision to disband the Industrial Strategy Council. The rationale appears to be that this body was set up in 2017 – prior to the UK leaving the EU, before the PM made his net zero pledge and before anyone had ever heard of COVID. These events have radically changed the game. The new Business Secretary, Kwasi Kwanteng, has promised to reveal his newly branded ‘Plan for Growth’ during the next few months. We are left to speculate about its likely contents, but all the signs are that this will be driven by science and technology with more emphasis on regional development.
Government may change the label, but industry still needs to know that there is a clear strategy that companies can understand and follow.