Manufacturing Sector: Election 2024 Commentary

Labour have promised a new industrial strategy and to re-instate an Industrial Strategy council, alongside the National Wealth fund promising upgraded ports and supply chain improvement, where the conservatives are planning on progressing the advanced manufacturing plan that was developed last year, supported by a £4.5bn commitment to strategic manufacturing sectors.

Labour have declared an initiative which would see £500m of funds available annually from 2026 to act as an incentive for manufacturers developing clean energy and investing in good jobs. The conservatives have committed to investing £1.1 bn into the Green Industries Growth Accelerator.

The Conservatives have pledged not to increase corporation tax whilst Labour have promised to cap corporation tax at 25%.

These promises sound broadly similar but businesses with profits below £250,000 pay tax at a rate between 19% and 25% so, whilst it is unlikely to happen given the importance of SMEs to the economy, under the Labour manifesto the lower rate could be withdrawn leaving a single rate of 25% which would increase the tax burden on SMEs.

The Conservatives have pledged to extend the full expensing policy to leasing once fiscal conditions allow which would benefit any manufacturing groups that ringfence their plant and machinery within a group company and lease it to the group to provide commercial protection. with Labour promising to retain the permanent full expensing system for capital investment included in the 2023 Autumn Budget and the existing Annual Investment Allowance for small business. The Conservatives say they will lift the employee threshold for business size, allowing more companies to be classed as medium size reducing administrative time requirements and the ability to benefit from the available tax reliefs.

On R&D, The Conservatives vow to increase R&D funding from £20bn to £22bn, and will try to bring more SMEs into the scope of R&D. Labour instead vow to scrap short funding cycles, shifting to a 10 year budgets model instead. The liberal democrats have said they would aim for further R&D investment with some ambitious targets.

While Labour have stated they do not intend to increase taxes, the Conservatives are proposing to cut National Insurance contributions by 2%, which would be welcomed by employees in the sector.

Labour have pledged a number of things in relation to skills and workers, including a youth guarantee for access to training and banning zero hours contracts. The conservatives have focused more on apprenticeships, pledging 100,000 more apprenticeships every year. The liberal democrats have concentrated on worker protection, wanting to fix the visa system and replace the apprenticeship levy with a broader skills and training levy.

• A proper industrial strategy that is for the longer term with SME manufacturers at its core
• The Carbon Border Adjustment Mechanism being aligned with the EU CBAM to provide a level playing field
• A wider reaching apprenticeship model
• Opportunities for SME manufacturers to have access to funding across the UK
• Reliefs for smart factory and ESG investment