Action on business rates and energy efficiency will avert a tax cliff edge and encourage investment
In a report published today, the CBI has called on the Chancellor to back the UK’s manufacturing sector by addressing the business rates cliff edge and extending the Industrial Energy Transformation Fund beyond 2025 in his Autumn Statement.
With business rates set to increase in line with inflation by 10% in April 2023, the CBI is urging the government to address rates before a significant number of manufacturers face a tax cliff edge – one that could damage their business and stunt growth across the UK economy. Tackling business rates would also unlock investment to build new factories, employ more staff, and focus on net-zero.
Extending the Industrial Energy Transformation Fund beyond 2025 would help kick-start energy efficiency drives and reduce demand.
Matthew Fell, Chief UK Policy Director at the CBI said:
“The Chancellor needs to walk and chew gum in his Autumn Statement: he must simultaneously stabilise the economy and set out a credible platform for growth.
“The manufacturing sector has a big role to play in the UK’s growth story. For every million pounds invested in the sector, the industry produces another £1.5 million for the wider economy. To help unlock this investment, the government needs to address the business rates cliff edge. Without serious action ahead of next April, many businesses will struggle with eye-watering rises in their business rates.
“Another major cost pressure right now is, of course, energy. Improving energy efficiency is an important part of the toolkit for firms to manage these costs in the long-run. Extending the Industrial Energy Transformation Fund beyond 2025 to 2030 would give the sector the capital to invest and make their buildings and operations more efficient.”
Brian Holliday, CBI Manufacturing Council Chair said:
“It is great to see the CBI backing UK manufacturing. The sector is key to the growth and resilience of the economy as a whole and crucially, the development of green technologies. If the country is to avoid the worst effects of recession and reduce carbon emissions, manufacturers need confidence to invest.
“Government can help in the short term, enabling finance to flow into projects through freezing business rates whilst extending targeted policy instruments such as the Industrial Energy Transformation Fund.”