UK manufacturers call for ‘major MOT’ of business tax and regulation system


Britain’s manufacturers are urging the chancellor, Jeremy Hunt, to announce a “major MOT” of the UK’s “uncompetitive” business tax and regulatory system in his autumn statement next month.

Many aspects of the system are “not fit for purpose”, the business group Make UK said in a report published in the middle of the political party conference season, and called for major reform as part of an industrial strategy.

In his speech at the Conservative party conference in Manchester last week, Rishi Sunak made no reference to business tax and regulation. However, a survey by Make UK and the tax advisory firm RSM found almost half of UK companies (44%) believe the tax and regulation system is unfavourable, and more than a quarter said it was worse than that of China and other major competitors.

Only 8% of the 150 companies polled between 26 July and 19 August said the tax and regulation system had no impact on investment decisions.

Manufacturers argued that frequent changes to business incentives and research and development credits in recent years had hindered businesses’ investment plans. Make UK is urging the chancellor to limit himself to a single annual fiscal statement from now on.

More than two-thirds of companies said an industrial strategy would lead to greater investment in skills, research and development, and decarbonisation.

Reforms to improve competitiveness would look at measures such as business rates, research and development tax credits, the apprentice levy, corporate tax rates and capital allowances, and whether they help the economy achieve more investment, innovation and its net zero ambitions.

Fhaheen Khan, a senior economist at Make UK, said: “Manufacturers are clear that many aspects of the current tax and regulatory system are not fit for purpose and are failing to promote vital investment in skills, capital and green growth. This is not helped by the fact we have two fiscal statements a year, which hampers businesses’ investment planning.

“We cannot continue with the current flip-flopping and policy inconsistency if we are to shake the economy out of its current torpor and promote long-term growth. Government must start by conducting an urgent MOT of the current unfavourable regime to make it work for, rather than against, business.”