Retail trade union Usdaw has a delegation of members, reps and officials attending the annual conference of the Scottish Trade Union Congress (STUC) in Dundee, which started on Monday and concludes tomorrow.
Moving the composite motion about childcare, Elaine Dennis – Usdaw delegate said: “In recent years working parents across Scotland have come under huge strain due to the growing lack of affordable, flexible and accessible childcare.
“Undoubtedly, the cost of living crisis has intensified this problem, with women often bearing the brunt. Childcare is not just an equality issue and a trade union issue, it’s key to economic growth and essential to tackling child poverty.
“Despite childcare being so crucial to working families and women’s equality.
“The current system is failing parents who are struggling to find good quality affordable childcare, failing childcare workers, who are often underpaid, and underappreciated, and failing children across Scotland, who are missing out on vital opportunities with one in four living in poverty.
“Most Usdaw members work in lower paid sectors like retail and warehousing; the majority are women, so childcare is a huge issue for our members. The costs of childcare and nursery fees are simply unaffordable for many parents in lower paid jobs and even where free hours are available, the system is complicated and difficult to navigate. Many families don’t know what they are entitled to and many more are left with huge gaps in provision.
“Balancing work with childcare in a sector like retail is not easy and women are often the primary carer. It is so often invisible to employers and managers, yet it shapes working lives.
“We know from supporting many of our women members with children, the effort they put in to making themselves available for work is enormous. It often means getting up very early or going to bed very late and regularly arriving at work on very little sleep.
“It means putting a lot of effort into scheduling childcare around work, creating a complicated patchwork of support. Working out when grandparents, neighbours or older siblings are available to look after young children in the morning, evening or for a few hours after school. This is why good wraparound childcare provisions are so important to working parents.
“We know that many parents work ‘opposite shifts’, with families barely able to spend a minute of quality time together. Workplace policies help and unions do a great job negotiating flexible working agreements that make a real difference to women’s working lives, but women working in part-time, low hours and low paid jobs, who are worried about holding onto them, are often too afraid to ask their employer for help.
“A successful childcare system should enable parents to work the jobs and the hours that they choose to. Instead, it is a barrier to work for those in lower paid jobs.
“It prevents women from progressing, trapping families in poverty and ingraining inequality. We desperately need a childcare system that supports working parents and grandparents, valuing these dedicated workers and supporting families in Scotland.”
£4.5 billion for strategic manufacturing sectors including £960 million earmarked for clean energy
Funding will be delivered to eight sectors key to economic growth, energy security, and levelling-up
Part of wider Government support to ensure UK is the best place to start, grow, and invest in manufacturing
The Government has announced £4.5 billion in funding for British manufacturing to increase investment in eight sectors across the UK. The funding will be available from 2025 for five years, providing industry with longer term certainty about their investments.
Over £2 billion has been earmarked for the automotive industry and £975 million for aerospace, supporting the manufacturing, supply chain and development of zero emission vehicles, and investment in energy efficient and zero-carbon aircraft equipment.
Alongside this, the government has committed to £960 million for a Green Industries Growth Accelerator to support clean energy manufacturing, and £520 million for life sciences manufacturing to build resilience for future health emergencies and capitalise on the UK’s world-leading research and development.
With the entire manufacturing sector making up over 43% of all UK exports and employing around 2.6 million people, this funding is targeted at the UK’s strongest, world leading sectors; including where the industry is undergoing fundamental changes to remain at the forefront of the global transition to net zero, like the move to zero emission vehicles in the automotive industry.
The Green Industries Growth Accelerator investment will support the expansion of strong, home-grown, clean energy supply chains across the UK, including carbon capture, utilisation and storage, electricity networks, hydrogen, nuclear and offshore wind. This will enable the UK to seize growth opportunities through the transition to net zero, building on our world-leading decarbonisation track record and strong deployment offer.
The funding forms part of the Prime Minister’s pledge to grow the economy, and his focus on making decisions for the long-term, ensuring the fund doesn’t just focus on the most successful sectors today but looks ahead to how we keep pace internationally and build the UK’s expertise for the industries of the future.
Together with our existing manufacturing support and plans for net zero transition, this package will help unlock private investment, provide certainty to investors, boost energy security, and protect and create jobs. This approach has already mobilised £198 billion in public and private investment in low carbon energy deployment since 2010.
Today’s announcement comes ahead of the second Global Investment Summit later this month, which will showcase innovative companies from across the UK, with significant investment opportunities in sectors such as technology, sustainability, life sciences, advanced manufacturing, and creative industries.
It will also help ensure that the UK remains at the forefront of the global transition to net zero and can seize growth opportunities in the new green economy. The UK remains a world-leader in cutting emissions, having decarbonised faster than any G7 country since 1990 and set out clear plans to meet all our climate targets and deliver energy security.
Chancellor of the Exchequer, Jeremy Hunt, said: “Britain is now the 8th largest manufacturer in the world, recently overtaking France. To build on this success, we are targeting funding to support the sectors where the UK is or could be world-leading.
“Our £4.5 billion of funding will leverage many times that from the private sector, and in turn will grow our economy, create more skilled, higher-paid jobs in new industries that will be built to last.”
Business and Trade Secretary Kemi Badenoch said: “The UK is a global hub for advanced manufacturing, with world-leading automotive, aerospace and maritime sectors.
“This package builds on recent investment wins, such as the £4bn gigafactory, and the £600m invested to build the next generation of electric Minis, and ensures that the government can continue to help create jobs, grow the economy, and secure the future of great British manufacturing.”
Energy Security and Net Zero Secretary Claire Coutinho said: “Today we are announcing nearly £1bn to back our green industries.
“While we’ve already attracted £200bn in low carbon investment since 2010, with another £100bn expected by 2030, this will unlock even more. We have long been energy pioneers in advanced manufacturing, and this will allow us to carry on that great British tradition.”
The Government has also published its response to Professor Dame Angela McLean’s review of the role that regulation and standards can play in driving innovation and growth in advanced manufacturing.
The Government accepts all 14 recommendations in the industry expert-backed report which builds on the UK’s role as a global leader in setting industrial standards and sets out how, with the right regulations, advanced manufacturing processes can enhance safety and support the drive to net zero and a more sustainable economy.
Among the recommendations accepted is to accelerate the deployment of digital twins, which enables companies to create accurate digital replicas of the full manufacturing process. Used across a range of sectors, digital twins have seen significant uptake in the automotive sector including car production where they offer a transformative approach to product development, manufacturing and maintenance, helping firms test how to fix problems or make processes more efficient.
To boost growth in small and medium sized manufacturing businesses more widely, it has also been announced today that the Government will expand the Made Smarter Adoption programme to all English regions in 2025 before working with the Devolved Administrations to explore making the programme UK-wide from 2026/7.
The programme helps small and medium sized manufacturing companies to use advanced digital technologies which can reduce carbon emissions and drive-up productivity, and its expansion will also involve inclusion of digital internships.
Stephen Phipson, CEO of Make UK, the manufacturers’ organisation said: “Make UK has long campaigned for Made Smarter to be a fully national scheme so that all SME manufacturers can benefit from the expertise the programme delivers and we are delighted at today’s decision from Government to commit to a national rollout.
“Made Smarter has already transformed thousands of companies in the North East, North West, West Midlands and Yorkshire & the Humber and now it can help turbo-charge industrial digitalisation in SMEs across the whole of the country.
“The end-to-end specialist support the programme delivers has successfully helped smaller businesses dramatically boost productivity, improve energy efficiency, drive growth, upskill roles and deliver new jobs in digital skills to create workforces of the future which will allow Britain’s smaller manufacturers to continue to grow and remain globally competitive.”
Additionally, the Government yesterday committed to extend the Connected and Automated Mobility Research and Development programme with up to £150 million of funding between 2025/6 and 2029/30. This will help the UK secure first-mover advantage in the deployment of self-driving vehicles and services.
The UK’s first Battery Strategy is also expected to be published next week, which will outline the Government’s activity to achieve a globally competitive battery supply chain in the UK by 2030 that supports economic prosperity and the Net Zero transition.
They have also set out their plan to launch a Hydrogen industry taskforce, delivered in partnership with the Hydrogen Innovation Initiative and Innovate UK, supporting our ambition to maximise investment opportunities for UK manufacturing of hydrogen propulsion systems.
The Government will set out more about its offer to the manufacturing sector next week with the publication of the Advanced Manufacturing Plan.
Manufacturing stakeholders react to the £4.5 billion in funding announced today for British manufacturing to increase investment in eight sectors across the UK:
Kevin Craven, Chief Executive, ADS Group said: “On behalf of industry, ADS is very pleased to welcome the measures announced by the UK Government to support UK aerospace, re-affirming long-term backing for our world-leading advanced manufacturing sector.
“The UK’s aerospace, defence, security, and space sectors are powerhouses of growth, hubs of ground-breaking innovation, and pioneers of the UK’s advanced manufacturing capability.
“Set against a backdrop of increasing global competition, the continued commitment towards aerospace R&D is significant and will provide a boost to continued investment in innovation and advanced manufacturing in the UK. This is a very timely intervention given the growing pace of aerospace recovery, huge aircraft order backlog and industries’ continued commitment to net zero.”
John Harrison, Chairman, Airbus UK and General Counsel, Airbus said: “Airbus welcomes the funding earmarked for aerospace and advanced manufacturing which offers greater certainty for long-term investment in sustainable aviation and highly skilled jobs here in the UK.
“This is positive for the UK economy both in terms of R&D investment today, as well as securing future growth”
Mike Hawes, Chief Executive, The Society of Motor Manufacturers and Traders (SMMT) said: “Today’s announcement is an unequivocal vote of confidence in the UK’s critical automotive industry.
“Coming on the back of almost £20 billion committed by the sector in next generation plants and technologies this year alone, it is indicative of the scale of investment such support can leverage and the result of substantial collaboration between Government and the industry.
“This additional Government investment reflects the fact the UK automotive sector has the talent, the innovation and the determination necessary to thrive in the face of fierce global competition. It will deliver benefits not just for the automotive sector but for the whole country in terms of growth, high value jobs and productivity. It also sends a powerful signal that the UK is open for business.”
Richard Torbett, Chief Executive, the Association of the British Pharmaceutical Industry (ABPI) said: “We’ve long believed that the UK’s has the potential to be a world leader in advanced and sustainable medicines manufacturing.
“This £520 million will supercharge UK life sciences manufacturing, combatting the increasing international competition to attract major manufacturing investment. Added to our existing strengths and technical expertise in manufacturing innovation, today’s announcement is a major step forward in delivering on our shared ambitions for long term growth.”
Dan McGrail, Chief Executive, RenewableUK’s said: “At a time when international competition for investment in clean technology manufacturing is fierce, the Chancellor is right to take a more proactive approach to stimulate green industrial growth.
“The UK’s leadership in areas like offshore wind has given us a strong foundation to build on, with supply chain companies already in place across the country employing thousands of workers. But with the global market set to skyrocket in the years ahead, we should be looking to capture as much of this multi-billion pound opportunity as we can through a more strategic approach to building the UK’s manufacturing base.
“The Chancellor has been clear that the Green Industries Growth Accelerator is for strategic industries, targeted to unlock maximum private investment where the UK can be competitive – and there couldn’t be a better fit for that than offshore wind and renewables.
“With the right support, the likes of which we’ve seen from Government today, industry estimates that the offshore wind supply chain alone could boost the UK’s economy by £92bn by 2040. The sector is working to develop an Industrial Growth Plan which will set out how we can capture this opportunity to boost our energy security, grow our domestic supply chain and provide affordable power to consumers”.
Brian Holliday, managing director at Siemens Digital Industries UK, and co-chair of Made Smarter, said: “Today’s announcement clearly says that UK manufacturing matters. It represents a tremendous investment boost for our makers that will enable the confidence to invest in innovation, productivity and sustainability.
“Key sectors benefit but so does the long tail of small and medium firms which is really important to directly address our recent challenges of weak overall productivity and investment.
“The business benefits of digitalisation are now clear, while being an enabler for industrial decarbonisation too – the package of measures announced in bolstering Made Smarter, targeted regulatory reform and sector support, along with our world-class Catapults and Universities now makes the UK one of the best countries on the planet to sustainably design, make and export goods.“
– Transport Minister Richard Holden outlines commitment to UK sustainable transport and maximising economic growth in Scotland – New hydrogen powered and self-driving trucks being developed in Glasgow will help create a carbon-free future – Meetings with local businesses and communities to explore ways to boost connectivity between Scotland and the rest of the UK
Plans to boost Scottish connectivity and economic growth through transport were at the heart of Transport Minister Richard Holden’s visit in Scotland yesterday (Monday 3 April 2023).
In meetings with local businesses and community leaders, he outlined the government’s commitment to developing new green technologies.
Minister Holden was in Glasgow to see new hydrogen-powered and self-driving trucks backed by £16 million Government funding, which could be seen on UK roads in the near future.
These vehicles would makeroads safer, increase productivity and help protect the environment.This investment is supporting the UK’s ambition of achieving net zero by 2050 and ensuring the UK maximises the opportunities offered by new technologies, while supporting high-skilled jobs.
Minister Holden also had a tour of new transport links in Ravenscraig and the surrounding areas, which has received £127 million investment jointly funded by the UK Government, Scottish Government and North Lanarkshire Council.
This investment will improve connectivity to local towns and cities, create thousands of jobs and encourage more people to walk and cycle.
Transport Minister Richard Holden said:“Innovation like this in Scotland will help the UK become a world-leading next-generation transport hub by protecting the environment and meeting our global ambitions.
“Boosting transport connections across the UK will grow the economy and ensure that everyone no matter where they live has access to well paid, high-quality jobs.”
The regeneration of the Ravenscraig site is estimated to generate 4,600 construction jobs in follow on development and £626 million for the local economy.
This funding is part of the Glasgow Region City Deal which saw over £1 billion committed for major infrastructure projects in Glasgow and the surrounding areas comprising of funding from the UK Government and Scottish Government.
UK Government Minister for Scotland John Lamont said:“UK Government investment is helping power Scotland into the fast lane of sustainable transport innovation and delivering improved connectivity – levelling up the UK and bringing communities closer together.
“From hydrogen-powered and self-driving trucks being developed in Glasgow, the regeneration of Ravenscraig’s road, rail, cycling and walking infrastructure, a new ferry to save Fair Isle, to a green transport hub in Dundee, we are working to improve people’s journeys, boost economic growth and protect the environment.
“But there’s more to be done and we are committed to continue working closely with the Scottish Government and local partners to deliver the benefits travellers want and businesses need.”
Minister Holden met local businesses and communities to explore how investment in road schemes, railway lines and domestic flights between Scotland and the rest of the UK could boost connectivity and stimulate economic growth.
Research found 60% of people thought that improving transport links across the UK would make a positive difference to their own nation.
Minister Holden will also be visiting Northern Ireland and Wales in the coming days.
FRIDAY’S ‘fiscal event’ contained some of the most substantial tax policy changes seen in recent decades (writes Fraser of Allander’s DAVID EISER). Combined with last week’s announcements on the Energy Price Guarantee and Energy Bill Relief Scheme, this constitutes a huge change in the fiscal outlook.
In this context, the decision not to involve the Office for Budget Responsibility (OBR) is irresponsible. It might be billed as a ‘Growth Plan’, but today’s announcements are a budget in all but name. The OBR plays an essential role in scrutinising tax and spend forecasts, assessing the likely impact of policy announcements on growth, the deficit and debt. Its exclusion from the process weakens transparency around the impacts of the proposals.
The new Chancellor (above) used the first part of his speech to reiterate the government’s unavoidably large interventions in the energy market to protect households and businesses from energy price rises. In the remainder of the speech he announced a host of measures designed to stimulate economic growth through a combination of tax cuts and regulatory changes.
Tax changes – implications in Scotland
There were two ‘tax cuts’ that are more accurately described as reversals in recent or planned increases.
A planned increase in the Corporation Tax rate from 19% to 25% will now not go ahead. The Treasury estimates this will cost £12bn in reduced revenue compared to its previous plans in 2023/24, and more in subsequent years.
The Health and Social Care Levy has also been scrapped, together with the 1.25% increase in dividend tax rates. These changes will cost almost £18bn in reduced revenues in 2023/24 compared to previous plans.
Both of these changes had been pre-announced and apply UK-wide.
The big surprises came on income tax. Here the government announced the biggest reforms (at UK level) since 2009.
The basic rate will be reduced from 20p to 19p one year earlier than expected, applying from April 2023 rather than April 2024.
The 45p additional rate will be abolished in April 2023.
Income tax changes and implications for Scotland
Of course, with income tax being devolved, neither of the changes will apply in Scotland. Instead, the Scottish Government will see a smaller reduction in its block grant next year than it was expecting, boosting the resources available to it in 2023/24 (the reduction to the Scottish Government’s block grant is broadly designed to reflect what the UK government would have raised from income tax in Scotland if income tax had not been devolved, and if the UK government income tax policy had continued to apply in Scotland).
In the context of this additional resource through its block grant, the Scottish Government will then need to decide whether and how to respond through its own tax policy.
It could of course keep Scottish tax policy unchanged. This would enable it to use its additional block grant to invest in public services in Scotland. The cost of it doing this politically would be that the gap between Scottish and rUK tax policy would widen substantially. Almost all Scottish income taxpayers would pay more income tax than they would in rUK. A Scottish taxpayer with an income of £29,000 would face liabilities around £160 higher. A Scottish taxpayer with an income of £50,000 would face liabilities almost £2,000 higher (Chart 1, black line).
Chart 1: Potential difference in income tax liability between Scotland and rUK, in 2023/24
Alternatively the Scottish government could mirror UK tax cuts with tax cuts of its own. It could for example decide to reduce the starter, basic and intermediate rates by 1p. This would broadly retain the difference in tax liability for individuals between Scotland and rUK at current levels (Chart 1, grey line). It would allow the Scottish Government to retain its treasured mantra that ‘the lowest income half of Scottish taxpayers pay less tax than they would in rUK’. But such a policy would cost the Scottish government around £400m in foregone revenues.
Other policy decisions are possible. The Scottish government could decide to cut just the starter and basic rates in Scotland, rather than the intermediate rate as well, at a revenue cost of around £250m.
How the Scottish Government responds to the UK Government’s abolition of the Additional Rate will also be interesting. The Scottish Fiscal Commission is likely to forecast that abolition of the Additional Rate wouldn’t be extremely costly in revenue terms (there are expected to be around 22,000 Additional Rate taxpayers in Scotland in 2023/24 so charging them a few pence less tax on their income above £150k might not have a significant affect in aggregate, particularly if it is assumed, as the SFC will, that the tax reduction will induce some element of a positive behavioural response).
The Additional Rate policy therefore puts the Scottish Government in a difficult political position. If it retains the Additional Rate it will be accused of undermining the ‘competitiveness’ of the Scottish economy, for little direct revenue gain (without any changes to existing policy, a taxpayer with an income of £200,000 would face an additional £5,900 in income tax liabilities in Scotland compared to an equivalent taxpayer in England).
But abolition of the Additional Rate would provide a significant tax cut for the highest income 0.5% of the Scottish adult population (an individual with income of £200,000 would be better off to the tune of £2,500 if the Additional Rate is abolished). The regressivity of a cut to the top rate in Scotland is difficult to reconcile with the Scottish Government’s aspirations for progressivity.
Stamp Duty changes and implications for Scotland
The Chancellor also announced changes to Stamp Duty in England and NI, amounting to an increase in the threshold at which Stamp Duty applies to residential transactions.
As with income tax, these changes will not apply in Scotland. As with income tax, the changes to English policy will pose dilemmas for the Scottish Government when considering its policy on the Land and Buildings Transaction Tax.
The Scottish Government has until now set LBTT in such a way that homes sold in Scotland for less than around £335,000 pay less tax than an equivalent property in England. Above this price, transactions in Scotland face noticeably higher tax liabilities. The changes announced by the UK government today mean that – if there are no changes to the existing Scottish LBTT rates – all property transactions in Scotland would face higher tax liabilities than they would in England (see Chart 2).
The Stamp Duty cuts in England will generate some additional resources for the Scottish Government via its block grant. In ballpark terms the increase in resource might be around £80m. It could use this additional resource to fund public services, or to cut LBTT rates in order to maintain existing tax differentials.
Chart 2: Residential property transactions tax liabilities in Scotland and England
Investment zones – an option for Scotland but at what cost?
The UK government announced the establishment of several dozen ‘investment zones’. It is hoped that these zones will ‘drive growth and unlock housing… by lowering taxes and liberalising planning frameworks’.
Policies implemented within the investment zones will include business rate reliefs for newly occupied or expanded premises, and stamp duty relief on land bought for commercial purposes, and a zero-rate of employer National Insurance Contributions for new employees earning below £50,270.
The hoped-for impacts of these investment zones on UK-wide economic activity – as opposed to their effect on displacing economic activity within parts of the UK – is based more on hope than on empirical evidence.
Several dozen potential zones have been identified in England. The UK government says that it will work with the Scottish government and local authorities to identify zones in Scotland.
What is not yet clear is how the costs of investment zones in Scotland – in the form of reliefs on business rates and stamp duty (which are devolved) and NICs reliefs (which are not devolved) – will be distributed between the Scottish and UK governments. The Treasury’s costing document does not seem to give an indication of the funding associated with the planned investment zones in England, so it is difficult to get a sense of the fiscal scale of these interventions at this stage.
U-turn on IR35
In another regulatory reform design to unlock growth, the chancellor announced the repeal of the anti-avoidance legislation commonly known as IR35. This legislation was designed to reduce so-called “disguised employment”, whereby workers could work long-term for businesses as self-employed contractors rather than employees – and in so-doing reduce the tax liabilities faced by both themselves and the company that they were contracted to.
The IR35 regulations were introduced for public authorities in 2017, and for medium and large enterprises in 2021. The regulation has big impacts on the nature and shape of the workforce in particular sectors.
The introduction of IR35 has been a huge undertaking by public authorities and corporations to ensure compliance with the legislation, so the change announced today is a big deal. It is a shame that we don’t have the view of the OBR of the impact this could have on Income Tax and National Insurance Contributions: but the costing published today by the Treasury suggests it could cut tax receipts by £1.1 billion in 2023-24, rising to £2 billion by 2026-27.
The Energy profits levy – the existing windfall tax
Interestingly, although the Prime Minister has made it clear that additional windfall taxes were not going to be introduced on oil and gas companies, we need to remember that the Energy Profits Levy announced in May is still in place.
This is a 25% additional surcharge on the extraordinary profits that are being made by the oil and gas companies. When it was announced in May, it was expected that this could raise £5 billion this year, although there was a great deal of uncertainty about this.
Under current plans this levy will remain in place until December 2025, and on the basis of the costings published today, the Government has no plans to end it early. The policy is now forecast to raise £28 billion over the next 4 years (including this year). This is another area of costing that it would be particularly useful to get independent scrutiny from the OBR.
Summary: a gamble on growth with long odds
It is undeniably the case that the UK (and Scottish) economies have been characterised for the last 15 years by very weak growth. This has resulted in stagnation in household incomes and living standards, and constrained the growth of government revenues – with implications for investment in public services.
It makes sense therefore for the government to put the objective to raise economic growth at the centre of its strategy. But setting a 2.5% annual growth target, as the UK government has done, is much easier said than achieved.
The government’s decision to reverse the Health and Social Care Levy and cancel the planned Corporation Tax increases merely take policy back to where it has been in the recent past. It is a return to orthodoxy rather than a break from the norm, and in this sense it is difficult to see that it will make any difference to growth.
The substantial cuts to income tax do represent a bigger change to existing policy. But the hope that these will stimulate the economy is based more on blind faith than on any tangible evidence. There is no evidence internationally that countries with lower tax rates grow more quickly. Historically, UK growth rates were highest when tax rates were higher.
Whether today’s announcements unleash economic growth remains very much to be seen. Strikingly, what there was no mention of today was any plans for additional public sector investment. Despite the government’s rhetoric about reforming the ‘supply-side’ of the economy, there was little mention of the role that the skills and health of the population play in influencing the capacity of the economy to grow.
Whilst the government seems comfortable borrowing an additional £30bn or so a year to fund the tax cuts announced today, and is apparently relaxed about an over-growing burden of national debt, the path set out today will constrain the government’s room for manoeuvre on investment in public services in coming years.
At a time when parts of the public sector are struggling to deal with the legacy of the pandemic and other longstanding challenges, the implied prioritisation of tax cuts over public services investment will prove highly contentious, particularly given the regressivity of the cuts.
Households in the top 10% of the income distribution in Scotland will be better off by around £24 per week on average as a result of the cancellation of the Health and Social Care Levy, whereas those in the middle of the distribution will be only £4 per week.
The hope that the policies announced on Friday will boost growth and hence revenues despite cuts in tax rates is a big gamble with long odds.
