The key points in the EEF speech
The Chancellor of the Exchequer has spoken of the importance of scientific and technological investment and education in a speech to industry leaders – and admitted that governments have got it wrong in the past.
In a speech to Make UK, formerly the EEF, the trade association for UK manufacturers, Philip Hammond said the UK had become so intent on upping the number of university students that it had neglected people with practical talents.
“For too many years, our education system has been focusing on the top level skills of the few, at the expense of the more practical capabilities of the many,” he said. “In doing so, we’ve hollowed out our manufacturing skills base.
“Britain’s modern manufacturing sector is and must remain one of our distinctive strengths and competitive advantages.The skillset we need for our advanced manufacturing industry requires us to focus, not just on degree-level skills, but also on a wide range of specialist, technical skills.”
However, he said the government recognised this and was addressing the issue.
“We have committed £500 million a year to introducing a new system of vocational training, have put the first £100 million into the new National Retraining Scheme, and are delivering three million apprenticeships in this Parliament,” Hammond said.
And he said investing in and supporting research and technology was crucial, adding “Our history is one of innovation – we are the nation of Stephenson, Faraday and Whittle. Everyone is familiar with the stats that point to Britain’s leading role in scientific research – just four per cent of the world’s researchers, but 15 per cent of the world’s most highly cited articles.
“Since 2016 we have committed an additional £7 billion to science and innovation. Support for businesses through research and development tax reliefs has tripled since 2010. Our ambition is to lift research and development spending to 2.4 per cent of GDP by 2027.
“What is good for individual businesses is also good for the economy and for households – increasing productivity is the only sustainable way to boost wages.”
Last year, the government increased the annual investment allowance – which allows businesses to claim the full cost of plant, machinery and some fixtures as an expense on their tax return – from £200,000 to £1 million for 2019 and 2020.
It also introduced a new, permanent structures and buildings allowance to provide tax relief for companies investing in new commercial buildings.
Brexit
Hammond also discussed Brexit, stating that Theresa May’s unpopular withdrawal agreement was “the only way” to deliver Brexit without economic damage. He emphasised that avoiding a no deal was the priority, acknowledging the damage it could cause for the country’s future prosperity.
There are widespread and profound concerns among both Leave and Remain voters about May’s proposals, which would mean the UK continued to be subject to EU law, could not negotiate any new trade deals and remained bound by EU foreign policy – nullifying most of the benefits of leaving, while removing most of the benefits of being a full member.
However, he painted an optimistic picture of the British economy as a whole.
“Britain remains a dynamic and open economy. Just this morning we saw record high employment numbers, and ten-year-high wage growth figures. We are an economy that has grown continuously for nine straight years, creating 3.4 million net new jobs in the process,” he said.
“Brexit will be our chance to show that we can combine a strong and continuing partnership with the EU, with a new focus on building on our historic overseas relationships, and forging new links with the fastest growing economies of the world.”
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