Manufacturing industry leaders are calling on the new Chancellor of the Exchequer to deliver on the Conservative Party’s pre-election pledge to support innovation, ahead of the Budget on 11 March.
Rishi Sunak will deliver the first post-Brexit Budget after a whirlwind few weeks at the Treasury which saw former Chancellor, Sajid Javid resign.
Now manufacturing leaders say any upheaval at the Treasury must not be allowed to impact on plans to boost research and development (R&D) in the sector.
During the General Election campaign Boris Johnston said his party would increase the R&D Tax Credit rate for large companies from 12% to 13% to boost key sectors. The Tories also vowed to review the definition of research and development so areas such as cloud computing and data can be incentivised for SME’s.
McMullen Facades is a leading specialist facade contractor which has been involved in the construction of many landmark buildings in London and around the world. It has urged the government to honour its pre-election pledges stating support for R&D is vital to the manufacturing industry.
McMullen Facades Managing Director, Ronnie Mills said: “R&D is at the very heart of our company, we place great value on the benefits of innovation and continually look at areas where we can improve to keep us at the top of our game and remain competitive.
“We value support for R&D and are pleased to see the government rewarding innovative companies through R&D Tax Credits. But this support must continue, and I urge the Chancellor to enhance the level of R&D Tax Credits in the upcoming budget.”
Tax specialists, The Momentum Group, has also launched a White Paper to ensure businesses in the manufacturing sector are getting all the support they need.
Although the manufacturing industry accounts for the majority of R&D expenditure in the UK (65% or £16.3billion in 2018), this is down from 84% in 1985.
Counteracting the effects of this trend has been one of the main focuses of UK industrial policy in recent years. For example, successive governments have supported the development of the Catapult Centre Programme.
These organisations and campuses seek to connect businesses, academics and industrial research so that technological advances can be more easily converted into commercial products or processes.
The message is clear, innovation breeds success. For every £1 spent on R&D an additional £2.55 is pumped back into the economy.
Since its inception, The Momentum Group has helped its clients identify over £135+ million. The company’s White Paper sets out why investing in R&D is vital for both SMEs and large companies.
Managing Director, Tom Verner said: “While HMRC statistics show many industries in the UK are waking up to the benefits of R&D Tax Credits, the potential is far greater.
“In our experience, there are still so many manufacturing businesses that are either not aware of R&D Tax Credits, incorrectly think they do not qualify or feel they lack the necessary experience to submit a claim. In fact, many companies are not claiming their full legitimate entitlement and could be losing out on tens of thousands of pounds.”
There are some green shoots of optimism for the manufacturing industry with the preliminary February PMI (Purchasing Managers’ Index) being recorded at 53.3. The latest result brings the PMI to its strongest reading since last April which indicates a stabilising in the industry, following eight months of contraction.
Tom Verner, Momentum Group, Group Managing Director launches R&D Tax Credits White Paper.