Gordon Birtwistle MP writes: Liberal Democrat Campaign for Manufacturing launches

As someone with a long-standing interest in manufacturing, based on having over 50 years’ experience as an engineer and employer in industry, I am very excited to be a member of the newly formed Liberal Democrat Campaign for Manufacturing Group.

This much-needed group aims to promote and develop manufacturing in the UK in both existing and new areas. Whilst we have a manufacturing sector to be proud of, it does require investment. Energising this sector is key to getting the economy back on track in the current difficult economic climate.

The Liberal Democrats have already delivered a number of key policies to support manufacturing, but we have to do more if we want the sector to play a key role in the economic recovery. We need to be making more in Britain, and we need pro-active policies that increase industrial capacity, and create new jobs.

A key initiative that the group will be promoting over the coming months is the introduction of a 100% capital allowance on all capital purchases for a fixed 2 year period. This will encourage companies to draw on substantial cash reserves to invest in new capital assets, rather than sitting on reserves or delaying or shelving investment decisions. It provides a short-term financial incentive by allowing capital investment to be paid for completely out of profits. The Treasury will see a reduced corporation tax income from manufacturers for a 2 year period, increased income after that, and increased PAYE income from the additional employment that comes from a growing manufacturing sector.

In my view, if the Government wishes to see substantial growth in the economy over the next two years it needs to show confidence in its growth programme. Adopting this measure would, I believe, give confidence to manufacturing companies to invest and we all accept investment is the key to growth. I see this as a very critical issue and as time is short the measure should be introduced in the Autumn Statement at the latest if we wish to see growth in the economy over the next eighteen months.

The Liberal Democrat Campaign for Manufacturing Group benefits from support from the Chief Secretary to the Treasury, Danny Alexander MP, who will be speaking at the launch of the Group, which will take place at Liberal Democrat Conference in Arundel Room 2, Holiday Inn, Brighton on Tuesday 25 September from 6.15 – 7.30pm.

You can find out more about the group on our website here and keep up-to-date with our activities on Twitter and Facebook. If you’d like to get involved please contact William Hobhouse at this address: [email protected].

* Gordon Birtwistle is Member of Parliament for Burnley, Chair of Lib Dem Parliamentary Committee on Business, Innovation and Skills, co-founder of the Lib Dem Campaign for Manufacturing and and Chair of the All Party Parliamentary Group on Apprenticeships.

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8 Comments

  • Jonathan Webber 13th Sep '12 - 9:19am

    This is a welcome innovation and worthy of wide-reaching support and I look forward to attending the meeting. Man ufacturing is equally the heartbeat of the Midlands – and especially the West Midlands where I am presently the Regional Chair. Let me also declare an interest as in that I am Director of International Trade & Development at the Birmingham Chamber of Commerce and UKTI in Birmingham & Solihull. There is a massive debate to be had around manufacturing , the low carbon agenda, aerospace/ automotive, High Value Engineering, links to academia, technology transfer and knowledge partnerships and then internationalisation through EU and other programmes addressing innovation and development. Manufacturing is also a leading driver in the international trade and inward investment agenda .

    I suggest that there is an important wider reaching debate to be had over our relationship with business as a whole, but especially Small and Medium Sized Enterprises (SMEs) with a focus on the micro (less than 10 employess) and smaller end. Consider for a moment that the 4,600,000 SMEs in the UK account for:

    99% of UK business
    59% of private sector employment
    49% of private sector turnover
    employ an estimated 13.5 million people
    an estimated combined annual turnover of £1,500 billion
    have 850,000+ in construction = 20% of all UK enterprises
    London has 750,000 SMEs
    The South East 730,000 SMEs – combine the two and you have 33% of the UK total…

    I am currently writing a pilot paper (discussion document) on what a Liberal Democrat SME engagement initiative might look like – and I would be very interested in any contribution that might help inform an approach.

    Jonathan Webber
    West Midlands

  • trevor stables 13th Sep '12 - 10:27am

    Well done Gordon …keep it up! This needs to be done to kick start investment in manufacturing…, 100% capital allowances for all businesses FOR 2 YEARS to allow them to get the plant and equipment to get cracking! ARE YOU LISTENING NICK, VINCE AND DANNY! This is what the Germans have done to get their manufacturing industries going and is a very efficient measure.

  • Richard Dean 13th Sep '12 - 2:26pm

    Why not simply buy something? Keynes. A simple balance. When the population’s consumption gos down, government consumption needs to go up to avoid a recession.

    Companies like mine won’t be fooled so easily. Net present value. Getting a rebate today and having to pay for it tomorrow is not necesaarily an attractive option, especially if everyone does it and we end up in the same savings trap tomorrow as a result.

    Where do those figure come from, Jonathan Webber? They look wrong to me. Thanks in advance for your information.

  • Richard Dean 13th Sep '12 - 2:44pm

    Apologies – the statistics seem right, although they need to be seen in context, eg.. http://www.fsb.org.uk/pressroom/assets/statistical%20release%20bpe%202011%20edition.pdf

  • Liberal Eye 13th Sep '12 - 3:34pm

    An excellent initiative. But why limit 100% capital allowances to just two years? Why not make them permanent?There is a case for moving the basis of tax from profit (a somewhat ‘elastic’ concept) towards cash extracted from the business. Inter alia this would help cut the cost of capital.

    Bob Cringely has some interesting insights into where future jobs will come from that suggests we need to go way beyond tax breaks and re-fashion the entire ecosystem in which innovation and business growth occurs. His comments relate specifically to the US but, suitably adapted, make sense here too (the headline point is the one that I find least persuasive).

    http://www.cringely.com/2012/09/05/ticked-off-how-stock-market-decimalization-killed-ipos-and-ruined-our-economy/

    @ Jonathan Webber. I await your discussion paper with interest. 13.5 million employees of SMEs is a lot of people – roughly 20k per constituency. Especially at the micro end it is reasonable to assume that at least as many again – spouses, relations, employees etc – are strongly influenced by what you might call an ‘SME perspective’. In other words, this is a potentially key constituency badly neglected by ALL Westminster parties. Moreover, as a group who are by definition accustomed to doing their own thing and standing on their own feet they ought to be open to a liberal perspective.

  • Jonathan Webber 13th Sep '12 - 4:42pm

    Liberal Eye: – SMEs at the micro end are indeed a key constituency and represent what you might call the ‘real-life economy’ in that the economy to the vast majority of people is about paying their bills and having a job at the end of the month. But contrary to what you may think they are NOT ignored by all three parties. Among the reasons I very much want to drive and deliver a Lib Dem SME engagement discussion paper is that I have a colleague whose views, experience and networks I trust implicitly driving an identical agenda for the Labour Party. In my professional capacity I have appeared three times to talk about SME international trade support to this group and find myself impressed.

  • Liberal Eye 13th Sep '12 - 6:01pm

    @ Jonathan Webber – I’m sure the Westminster parties don’t think they are neglecting SMEs. But for whatever reason they do just that in practice.

    The best interpretation I can put on it is that SMEs are, by their nature, diverse and difficult to get a handle on so that, human nature being what it is, the easy thing to do is to bend to the lobbying of large firms. Often this is presented as deregulation (this being fashionable) when in reality it’s more often re-regulation by the bully power of larger firms. Hence govt has presided over the growth of oligopolies in energy, banking, retailing etc. while it has completely failed to look out for the legitimate concerns of smaller businesses by ensuring fair competition. For instance, after years of supermarkets exploiting suppliers (and customers) with anti-competitive practices there is at last to be a regulator. I predict it won’t work but it will likely be yet another decade or so of can-kicking before any party admits this.

    Then there is local govt. Some of course are good to their credit but too many are bad. I have been told by the deputy chief exec of a council (and this is an exact quote), “You have to understand that the council has no interest in the success or failure of small businesses in the borough – it makes no difference to us.” The context was that a badly thought out plan would cost around 200 jobs in a number of small businesses and they didn’t give a toss. None of the political parties was much concerned either until the Labour administration started taking hits where it hurt.

  • Peter Watson 13th Sep '12 - 6:31pm

    @Gordon Birtwistle The Liberal Democrats have already delivered a number of key policies to support manufacturing
    Could you give us some examples, please. I am not trying to be facetious; we are often criticised by the right for blocking attempts to deregulate so it would be good to have counter-examples of our business-friendly policies, especially in manufacturing and supporting industries.

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