UK manufacturers hit back at claims firms are too reliant on foreign labour

The trade body for British manufacturers has hit back at ministers’ accusations that firms have relied for too long on cheap foreign labour, urging them to work in partnership with business instead of viewing it “as the enemy within”.

Make UK is calling on the government to recognise the challenges they are facing – including supply chain disruption and shortages of staff such as HGV drivers – rather than blaming them at a time when they are also facing soaring costs, including for energy and raw materials.

It is urging them to improve cooperation with industry to ensure companies can recover from Brexit and the pandemic, and enable firms to invest and grow over the next decade.

In an intervention ahead of the chancellor’s budget this month, and in a marked change in tone for the organisation, Make UK said the manufacturing sector felt government was not working with them in a “spirit of partnership”.

The organisation has urged the government to move on from Brexit, said Stephen Phipson, its chief executive. “Currently there is a feeling within industry that the government is still fighting the last war and sees business as the enemy within,” he said.

“Business has moved on and, government must do too, working in a spirit of partnership with industry to develop a longer term economic plan which has enterprise and wealth creation as the fundamental principle.

“Growth is the right solution to making the most of the opportunities ahead of us and getting the job done.”

Phipson added: “To encourage the investment in technology and skills we need to help make this realistically happen, government must set out a long term vision for the economy that works with the grain of business to promote growth and wealth creation, not against it.”

In the face of government calls to invest in training more domestic workers, manufacturing businesses insist they do not rely on cheap labour, and that the high skill sector already pays more than the national average. Make UK found that almost half (47%) of companies planned to take on an apprentice this year.

The manufacturing sector is forecast to grow by 7% this year and just over 4% in 2022, but the trade body is warning that it will not bounce back to pre-pandemic levels if the government increases the tax burden on producers.

Companies are calling on Rishi Sunak to extend the superdeduction tax break – which allows large firms to offset 130% of investment spending on plant and machinery against profits – beyond March 2023.

They are asking government to alter the business rates system, so that plant and machinery are not included in calculations. They are also requesting more support, such as VAT relief, for smaller firms in the intensive or high-energy raw material supply chains.

A Treasury spokesperson said: “We’ve backed businesses throughout the pandemic through our £400bn package of support, including our Plan for Jobs, business rates relief, grants and loans – and it’s working, with GDP recovering quickly, unemployment falling and the number of people on payrolls back up to pre-pandemic levels.

“We’re continuing to support businesses including through the super deduction – the biggest two-year business tax cut in British history – and investment in infrastructure, skills and innovation.”

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