Manufacturers demand action as slump in orders threatens jobs

Trade body urges the Chancellor to announce a package of measures in Tuesday's Autumn Statement, including easing access to funding

Mark Leftly@MLeftly
Sunday 27 November 2011 01:00

Britain's leading manufacturers have warned the Chancellor that unless he acts swiftly to boost demand there will be further job losses and a slow-down in growth.

Terry Scuoler, the head of the EEF, formerly the Engineering Employers' Federation, said on Friday: "The situation has deteriorated over the last month to six weeks. Exports, activity and confidence are all falling fast and we need the Chancellor on Tuesday to introduce measures to keep up demand and lift confidence."

He added that members of the EEF, which represents some 6,000 big and small manufacturers employing more than one million workers, are now reporting a sharp drop in demand from Europe and the Far East and this is likely to show up in the latest business trends survey to be published in about 10 days' time.

Manufacturing accounts for 55 per cent of all the UK's exports and for the past seven quarters the sector has shown consistent growth, so news that orders are now drying up will be a blow to the Government.

"We are hearing that companies which supply the automotive industry in countries like Italy are having orders cancelled," he said. "The Government cannot alter external demand but it can act to counter the debilitating effect on confidence that the external environment is having on firms that might otherwise be investing," he said.

Mr Scuoler added: "While we still support the Government's deficit control package, we believe that it's possible to come up with a Plan A Plus, which will allow for infrastructure plans and projects to help domestic manufacturing and demand.

"I am fearful the figures from the Office for Budget Responsibility on Tuesday will show growth has been revised down, so it's important that we come up with a decent industrial package which helps the economy without affecting the long term. Lower taxes and lighter regulation is still the top priority for business," he said.

Top of the EEF's wish-list is for the Chancellor to make R&D tax credit more effective at increasing innovation. It is also arguing for 100 per cent capital allowances for at least two years to encourage industries to start investing in new plant and equipment, while it wants compensation for energy intensive industries. Mr Scuoler said that energy costs for UK industry are much higher than for its overseas competitors and this can only be alleviated by the Government.

EEF members also want to see lighter employment regulation and urge politicians to continue the opt-out on the EU's Working Time Directive and to resist the Pregnant Workers Directive. The trade body would like to see it easier for people to work part-time, as well as more action on equal pay audits and employment tribunals.

Mr Scuoler added that many small manufacturers are finding access to finance tough. His suggestion is for the Business Growth Fund to be extended to cover debt as well as equity to widen the pool for potential applicants. The Enterprise Investment Scheme should also be extended to debt, in line with the Business Angel Fund.

One of the EEF's biggest beefs, however, is the shortage of workers with science and maths literacy and it called on the Government to ensure that there is more specialist careers advice for pupils, while building up links between industry and schools.

Lobby for training

Call for national insurance holiday

Liz Field, the chief executive of the Financial Skills Partnership, is lobbying the Chancellor for a national insurance holiday for training staff.

Ms Field said: "The lion's share of the private sector is the small-to-medium sized enterprises, such as accountants, insurance brokers and financial advisers. They are the means to economic growth in the UK."

She added that the more the Government can do to incentivise and encourage SMEs to create jobs, such as a national insurance holiday for training of staff, the sooner we will see a return to growth.

"This support would be vital to develop the skills of their personnel, which would increase productivity, competitiveness and growth."

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