North West Industry calls for seismic Emergency Budget as growth forecasts for 2023 slashed

NORTH West manufacturers are calling for a seismic emergency Budget on Friday on the back of a substantial revision downwards of prospects for 2023 in response to the eye watering increase in energy and other business costs companies are facing.

The revision downwards comes in the Q3 Make UK/BDO Manufacturing Outlook survey, that has recently been published, which is forecasting growth for manufacturing of just 0.6% in 2023, down from 1.7% being forecast as recently as June. Make UK has also slashed its GDP forecasts from 3.6% this year to just 0.3% in 2023.

In the last quarter, the performance of manufacturers in the North West was mixed. While total orders held up well compared to the national picture, largely driven by UK orders, output was well below the national level. This was reflected in very weak recruitment intentions for companies in the Region while investment intentions were cut back significantly.

This is in line with the national picture as companies seek to preserve cash flow. The performance of industry in the North West is still being impacted by the exposure of the Region to the automotive and aerospace sectors, both of which have seen much slower recovery from the Pandemic than other sectors.

Looking forward, given the potential for the economic situation to deteriorate further and force the sector into recession next year, Make UK re-iterated its call for Government to bring forward a 'shock and awe' package of policy measures on a scale in line with those seen during the worst points of the Pandemic. This is essential to prevent a permanent scarring of the economy, help protect viable companies in the North West and avert significant job losses.

The measures in the statement tomorrow must set out concrete and specific actions to help business deal with escalating energy costs, as well as a range of measures to aid cash flow, provide greater access to Labour and encourage investment, especially in energy efficiency technologies.

In a worst case scenario of companies being asked to stop production or, a reduced working week, Government should also introduce an energy furlough scheme similar to that introduced during the Pandemic.

Commenting, Dawn Huntrod, Region Director for Make UK in the North West said:- "Whilst industry has recovered strongly over the last year, the storm clouds are gathering in the face of eye watering costs and a very difficult international environment. This threatens to shatter expectations of a sustained recovery from the Pandemic and put many perfectly viable businesses in the North West at risk. Clearly some of the factors impacting companies are global and cannot be contained by the UK Government alone. However, we have already wasted a substantial amount of precious time over the summer playing the fiddle while Rome has started to burn. As a result, urgent and decisive action is needed by the Chancellor to help shield the economy and protect companies and jobs, otherwise we risk a permanent scarring of the economy."

Graham Ellis, Head of Manufacturing at BDO in the North West, said:- "Manufacturers in the North West continue to perform relatively well, but with growing inflationary pressures investment plans are being cut back significantly. Input prices at near record levels for the second quarter in a row as profit margins continue to fall. There are multiple demands on the new Government from all business sectors. However, I hope the Government will understand the particularly vulnerable position manufacturers find themselves in, particularly with the skyrocketing energy costs. Short- and long term tax incentives to encourage investment in energy saving plant and machinery would be very helpful in the current circumstances."

The immediate measures being proposed by Make UK include:-

► Reverse the decision to increase National Insurance Contributions that came into force in April 2022.

► Extend the business rates relief to include manufacturing and extend to the end of 2023.

► Simultaneously undertake a full and fundamental reform of Business Rates.

► Expand the current tax exemption for work related training into a Training Investment Allowance, providing a tax rebate on investment in training for existing employees.

► Commit to a full review of the Apprenticeship Levy.

► In order to help companies invest make the increase to the Annual Investment Allowance permanent.

More than 76,000 children get cycling with Bikeability in the North West Cycling to School

BIKEABILITY cycle training is booming across the North West, with 76, 151 children learning how to cycle between April 2021 and March 2022.

Following an uplift in cycling across the country, Schools have been quick to book Bikeability training to help their pupils learn how to cycle confidently on today's roads. In the North West, the number of children taking part in Bikeability has more than tripled since 20/21. This is thanks to an increased demand for Bikeability in Schools as children and their families are looking more cheaper, healthier, and more sustainable ways to travel.

Children who cycle enjoy better physical health and mental wellbeing and cycling to School saves both money and the environment. Swapping the car for cycling on the School run saves a family around £160 a year in fuel costs and almost half a tonne of carbon emission, that's equal to growing almost 8 trees for 10 years. Kids in the North West aren't just learning an essential life skill when they learn to cycle with Bikeability; they're saving money and our planet.

Across England (excluding London), 439,802 children learnt to cycle with Bikeability over 12 months, with 18% of those children living in the North West. Bikeability's expert instructors teach children essential cycling skills before taking the out on the roads to learn how to cycle confidently and safely with other road users.

It's not just children who are learning to cycle. Following a successful pilot in 2020, between April 2021 and March 2022, 2265 people from 621 families started their cycling journey with Bikeability Family as part of an initial small-scale rollout. Following the huge success of the new module, which helps families of all cycling abilities learn the basics of travelling together, even more families will have the opportunity to take part in Bikeability

Emily Cherry, Bikeability CEO, said:- "After 2 years of lower than usual delivery numbers due to School closures during the Pandemic, Bikeability is back with a boom. It's fantastic that more than half a million children and families took part in Bikeability from 2021; 2022, with delivery numbers up across all Regions. It's vital that children learn the essential life skill of cycling when they are young, as this helps embed healthy habits right into adulthood. I am so proud that we're helping to raise the next generation of cyclists, who will improve their health, protect the planet and save money by using something as simple as pedal power to travel. Bikeability has some incredible instructors and training providers in the North West. I'd like to thank them all for their hard work and commitment to teaching children and families to cycle."

Bikeability has taught more than 4 million children to cycle since its inception in 2007. In 2022 the Bikeability Trust received a record £20 million from the Department for Transport to deliver cycle training. By 2025, Bikeability aims to give every child in England the opportunity to learn to cycle.

Improving local cycling infrastructure helps to encourage more people to cycle and Bikeability enables children to start their cycling journey. Building cycle paths that separate cycles and motor vehicles and introducing low-traffic neighbourhoods creates a better environment for cycling and Bikeability gives families the tools they need to leave the car at home and start cycling.

Chris Boardman, National Active Travel Commissioner, said:- "For cycling to be the natural 1st choice for everyday journeys to shops, Schools and workplaces, 2 ingredients need to be present: safe spaces to cycle that are suitable for any age, and the ability to ride a cycle comfortably and confidently. Like swimming, being able to cycle is a life skill, 1 we want all children to learn from an early age. So well done to the Bikeability Trust on these impressive numbers."

Anybody can take part in Bikeability, you can find a course near you on the Bikeability website. If you're a teacher and would like to find out more about bringing Bikeability to your School, please click here.

Continued high inflation could impact the expected business rates hike

WHILE many were shocked; experts included; that the month on month inflation fell from:- 10.1% in July to 9.9% in August, it is still very close to the UK's 40 year record high. However, now specialists are worried that if inflation continues at this level for the month of September, then this could indicate that business rates for commercial properties will rise in the next revaluation by over £2 billion. An increase which many businesses will simply not be able to face.

Business rates are set at each revaluation for a period of time known as a rating list. The current rating list, running from the:- 1 April 2017 until the 31 March 2023, was extended due to the Pandemic in an attempt to ease the burden on businesses. Now with revaluation once more looming on the horizon, business owners and leaders are increasingly nervous as to what another rise could mean for their businesses.

For future rating lists (from the 1st of April 2023), the Government have shortened the period of time in which the rating list will cover. This, business rates reduction specialist RVA Surveyors says, is an attempt to make business rates liability more in line with up to date market rents; supposedly lessening the impact of sudden changes on businesses outgoing costs.

According to statistics published by the Valuation Office Agency (VOA), by March 2022 less than 40% of businesses in England and Wales have reviewed their business rates. A number that is considerably low, when parliament found that by January 2022, there were 1.9 million registered businesses in the UK. The move to a 3 year rating list is intended to lessen the impact of sudden changes in business rates, but with a predicted hike of up to 12% in the next revaluation, whether this will help is yet to be seen.

These figures paint a picture of a wider business community that is either unaware, sceptical, or simply too busy with the current economic climate, to think of challenging their business rates.

Anthony Hughes, Managing Director at RVA Surveyors, said:- "Business rates has seen an upwards-only trend for years, and it is past time for the Government to step up and sort out an increasingly outdated tax system. We need to see from Truss's Government that help for businesses is paramount in the coming days; not only to help businesses stay afloat, but to keep employment levels steady as well. Businesses have been suffering from escalating overheads, and a potential business rates hike on this scale could see many businesses closing their doors."

As bills continue to soar, and speculation as to when businesses will receive help from the Government runs rampant, business owners and leaders must take steps to create savings where they can.

£6.1m funding boost to accelerate digitalisation among Southport manufacturers

A trailblazing programme that has backed Southport manufacturers to adopt new digital technology and skills to create growth and jobs has secured £6.1m funding to continue for 3 more years.

Made Smarter has helped 2,500 small and medium sized companies across the Region start their digital journey by providing them with specialist advice and a digital roadmap to help them select the right approach, level of investment and tools for their business.

More than 250 of them, supported by matched funding, have invested in new technology, ranging from software and sensors to robotics and extended reality, to become more efficient, build resilience, increase their productivity and grow sustainably.

As a result, these manufacturers are set to create 1,250 new jobs, upskill almost 2,300 existing roles, deliver an additional £176 million in gross value added to the Region, and help the UK meet its net zero target by 2050.

Now with a further £6.1m funding from the Government, Made Smarter can accelerate its drive to support hundreds more SME manufacturers in Southport to embrace the industry 4.0 movement.

Meanwhile, as a result of the trailblazing work in the North West, the national roll out of the Made Smarter adoption programme has continued, and now includes the West of England and East Midlands. They join the North East, Yorkshire and the Humber, and the West Midlands Regions.

Alain Dilworth, Programme Manager for the Made Smarter Adoption Programme in the North West, said: "I am delighted that the Government has recognised the extraordinary impact that Made Smarter's adoption programme is having on digitalisation of SME businesses and the adoption of Industry 4.0 technologies in the North West whilst continuing to fund our work for the next 3 years. While UK manufacturing navigated the Pandemic and is working towards recovery, it is also bracing for further challenging times and economic bumps in the road ahead. Our rallying call to manufacturers is that digital technologies offer businesses opportunities to build resilience, innovate and transform. Digital tools can help manufacturers make marginal savings, set themselves apart from competitors in a volatile time, and make products quicker, affordable and more efficiently. This new funding means we can renew our ambition to reach out to the Region's SME manufacturers to connect them to the tools that will make an everyday difference to their businesses, build resilience and enable them to keep up with a fast-moving industry."

Made Smarter's simple and straightforward approach gets quickly to the heart of a business's challenges and supports them to take that 1st step in their digital transformation.

Registration takes 5 minutes and is followed up with a digital transformation workshop to identify core challenges and provide a bespoke digital manufacturing roadmap.

Made Smarter's team of expert advisors then pinpoint other ways that the programme can support a company's digitalisation including:- skills and leadership development, and recommending the correct technology to invest in.

For more information visit:- MadesMarter.UK.

This was by no means a mini budget, but is it enough for businesses?

CHANCELLOR Kwarteng presented the fiscal statement to the House of Commons. What many news outlets have referred to as a mini budget, and yet it was anything but numerous policies were expected to be on the agenda, including a host of tax cuts.

The tax cuts outlined this morning in the House of Commons was, as Paul Johnson of the Institute for Fiscal Studies said, the biggest amount of tax cuts since 1972. In total, a staggering £45 billion worth of tax cuts. Though consensus on the sustainability of the tax cuts announced has been, at best, rather cold if not lukewarm. Essentially, experts are crossing their fingers and hoping that this budget is not a repeat of Barber's 'dash for growth' economic budget.

Perhaps predictably for members of the Conservative party, a main focus of their tax cutting policies focused on economic growth; in most cases, cutting taxes for businesses. Business owners and leaders have seen an unprecedented rise in their outgoing costs. Since the Pandemic, many businesses have seen rises of over 350% in their energy bills. While the Government had already announced a price cap on energy bills, more help is always needed.

So what help is coming for businesses?

Help for infrastructures, such as energy and transport, were not a shock to anyone watching. What was light on the ground, however, was just how these would be established. Kwarteng's initial statements certainly had a mollifying effect: assistance was coming to certain sectors, but on second glance, there was no explanation as to how this help would actually support businesses.

"[…] fiscal responsibility remains essential […]" was 1 of Chancellor Kwarteng's most poignant lines in the 1st few minutes of the fiscal statement. For business owners and leaders, it is perhaps vital now more than ever. Some things were expected in the fiscal statement, such as the decision to cancel the planned Corporation tax increase; instead, staying steady at 19% from April 2023.

What was surprising however was the announcement of the Government's planned low tax investment areas. Covering almost forty areas across the UK, the Chancellor proclaimed that in these areas, specified taxes would be cut for up to 10 years. Qualifying investments in these areas could get 100% tax relief in plants and machinery, as well as purchases of land and buildings that are for commercial use or designated to be new residential developments.

In these tax sites, Kwarteng claims that business will not pay any stamp duty on newly occupied buildings, or any temporary cessation of business rates.

As a tax on commercial properties, business rates can often be in the top 5 largest costs for a business. With spiralling inflation, costs across the board have increased, and business rates is just 1 more tax that was expected to rise. The Valuation Office Agency is due to announce in the expected business rates hike in the coming weeks, a hike that the business rates reduction specialist RVA Surveyors, believes could be as much as 12%.

Anthony Hughes, Managing Director of RVA Surveyors commented:- "This budget was surprising in many ways. While those in receipt of temporary reliefs may see businesses survive to the next year, all businesses need to see what support is to come given the imminent end of certain reliefs. The Valuation Office Agency are about to announce the increase for the next revaluation, and we have heard nothing from the Dovernment on how this will be managed. It is going to be the small and medium sized businesses, the ones that hire locally and pump money back into their communities, that need these answers now."

The shadow Chancellor Rachel Reeves was not impressed. Reeves was quick on the draw, proclaiming that the business rates tax system needed to be replaced with a "[…] tax system fit for the 21st Century […]." An opinion shared by many business owners and leaders.

That these tax cuts will come from borrowing has bee a major sticking point since Truss's campaign to be Prime Minister. The Government's decision to double down on this policy, instead of the more popular increased windfall tax, will not have gained them any favours. A fact Reeves was quick to point out, as well as the negligible difference that removing or cutting the stamp duty would make.

Anthony Hughes added:- "While useful for those buying commercial property, stamp duty is not a priority for most business owners and leaders. In the grand scheme of things, it will not make a huge difference to the day to day running of a business."

According to a report produced in 2017 by the Property Industry Alliance, approximately 55% of the UK's commercial properties were rented, rather than owned.

Despite some gaps in how these changes will be delivered, organisations such as the Institute of Directors have welcomed the news:

'This is a good news day for British business. In a time of low confidence and economic uncertainty, the new chancellor's emphasis on going for growth will be very welcome to firms of all sizes across the UK. […] The introduction of investment zones, with a lower tax regime including for capital investment is also a welcome innovation, particularly if it channels funding into locations most in need of regeneration […]'

Clearly some things need to be worked out still, but many business owners and leaders will be sighing with relief at the promise of change.