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Chancellor should axe all budget statements, say manufacturers

The chancellor should axe the annual spring budget and autumn statement in order to provide greater certainty for Britain’s manufacturing industry, according to the main trade body representing the sector.

The head of Make UK is calling for the twice-yearly fiscal events to be dropped as part of a package of calls for the government to overhaul its policies on taxing and spending.

Its chief executive, Stephen Phipson, said on Tuesday that Jeremy Hunt’s budget next week should be the last fiscal statement by a chancellor, and that future governments instead should set out their tax and spend policies once, at the start of parliament.

Speaking at the Make UK National Manufacturing Conference in London, Phipson said: “If I were to ask [Hunt] to do one thing next week in the budget, it is to announce that, from now on, there will be no annual fiscal statements, let alone two a year.

The trade body boss added that the axing of these events should only be reversed in “exceptional circumstances”, arguing that the changes would provide greater stability for companies, which have experienced 26 changes to corporation tax since 2019.

The call is one of several put forward, alongside a call for a manufacturing industrial strategy that would increase the country’s manufacturing output from 10% of GDP to 15%. Make UK argues that this would add £150bn to economic output.

In recent years, it has become commonplace for both a spring budget and autumn statement to take place annually. However, Make UK, which represents 20,000 manufacturers, argues that having these events, which can introduce significant changes to tax policy, harms investment.

A recent survey of its members found that 62% felt frequent changes in policy incentives had made it more challenging to plan business investments over the past three years.

Phipson acknowledged that axing both fiscal events would be radical, but argued that “insanity is doing the same thing over and over again while expecting a different result”.

He said: “We have had six plans for growth in little over a decade, while the department responsible for industry has been reorganised five times in the same period. Any of you running businesses this way would have gone bankrupt.”

Under the proposals, there would be no changes to investment allowances, corporation tax or green targets for five years.

The Institute for Government has repeatedly called for a reduction in the number of fiscal events, saying that the current form led to “ad-hoc tinkering” with the tax system, and added uncertainty to the wider structure.

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Phipson’s other requests are for the government to match other major economies like the US, China and Germany and come up with a national industrial plan. This plan would include driving manufacturing output to 15% of GDP.

He said: “Some may see this ambition as fanciful but, as globalisation shifts, why not aim to produce more here so we are less dependent on others for everything, from our food to our energy and security?”

The body is also urging the government to significantly increase defence spending to ensure that a minimum of 2% of all government spending is ringfenced around that area.

On infrastructure, Make UK believes that the country needs to rip up the expensive and cumbersome planning system and replace it with a fast track for projects of strategic national importance.

Phipson also called for a change to the fiscal rules that he argues are preventing investment in capital spending. If the chancellor rejects such a change, Make UK proposes splitting the Treasury into a ministry for finance and a ministry for the economy.