Budget relief for UK chemicals industry
… but CIA sees missed opportunities to develop manufacturing strategy
London – Business will be relieved that the UK government included no unexpected tax increases in the budget, but it missed opportunities to set the right strategy for encouraging manufacturing, according to Steve Elliott, chief executive of the Chemical Industries Association.
The CIA, however, welcomed confirmation of a pre-budget promise to introduce a lower rate of corporation tax for income generated from innovations patented in the UK. It added , though, that this would have been even better news for UK manufacturing and the broader economy if implementation occurred before 2013.
An increase in the Capital Allowances rate for small businesses to £100,000 was also hailed as welcome news for capital intensive sectors such as chemicals and pharmaceuticals. However, Elliot urged the Government to raise the rate further and extending its reach to larger companies.
The CIA boss went on to comment on a list of further budget measures likely to impact chemical manufacturers:
Science, Technology, Engineering and Maths STEM subjects at Universities - additional funding for STEM subjects at universities is welcomed. The future of science based industries in the UK depends on high quality graduates and first class academic research.
Landfill Tax - in keeping the list of wastes that qualify for lower tier landfill tax broadly the same as present we welcome the recognition that changes to the landfill tax should be based on environmental principle rather than revenue generation. We also urge the Government to reinstate the use funds generated from the landfill tax to support environmental projects, which help our members find practical solutions to waste issues.
Energy - we were extremely disappointed that supporting documents made no reference to energy security and competitive prices. The Chancellor’s speech also made no reference to the importance of gas storage. Whilst we welcome investment in a broad energy mix it is important to recognise that increased wind capacity does very little to increase reliability of electricity supply.
Climate Change Levy - it was disappointing that the Treasury did not reconsider the Pre-Budget Report’s announcement to penalise energy saving businesses through an excessive reduction in the Climate Change Levy rebate from 80% to 65%. Any reduction in the rebate on Climate Change Levy given for sector Climate Change Agreements should be strictly limited to that required to comply with the minimum EU energy tax.