EEF urges tax breaks to stimulate investment

Leaders of manufacturing industry today called on Gordon Brown to give industrial investment a much-needed boost in the forthcoming Budget, amid signs that capital spending by firms has dropped to record low levels.

The Engineering Employers Federation urges the Chancellor to introduce a series of tax breaks to stimulate manufacturing investment.

The call from the EEF comes ahead of figures due to be published tomorrow showing even bigger falls in manufacturing investment than the recessions of the early Seventies and Nineties.

The federation estimates that investment in the first nine months of last year fell by 15 per cent compared with the same period in 2001.

The EEF's Budget submission urges Mr Brown to introduce immediate 100 per cent capital allowances for small and medium-sized firms and higher allowances for larger companies.

The Chancellor should also enable more companies to qualify for rebates on the Climate Change Levy, and look at introducing a new system of workers' compensation to replace employers' liability insurance, which has been blamed for driving scores of small firms to the wall.

Martin Temple, the director general of the EEF, said: "While Britain's manufacturers are pulling out all the stops to be ready for economic upturn, increasing costs of tax and regulation and growing uncertainty are constraining vital investment decisions. In these circumstances, the Chancellor must not add to manufacturers' costs."

Other measures called for by the EEF include a fresh strategy to increase waste recycling to offset the proposed increase in tax on landfill sites.