Overshadowed by Brexit drama, the Chancellor's Spring Statement was thin on the ground, but unveiled plans for a ‘dramatic’ temporary shift in import tariffs in the case of No Deal Brexit.
The Spring Statement provides an annual update on the health of the economy and progress made since the last Budget, but this year it came on the same day (13 March) as Parliament’s crucial vote on whether to support a no-deal Brexit.
Despite MPs voting firmly against a no-deal outcome, Chancellor Philip Hammond nevertheless announced plans for a temporary import tariff schedule that would come into effect in that scenario.
The move would aim to ensure that tariff-free EU imports could largely continue for up to 12 months, while protecting UK producers against unfair trading practices from other countries.
Under the temporary measure, 87 per cent of total imports to the UK would be eligible for tariff-free access. Ineligible imports would include meat and dairy, finished vehicles and other sectors where tariffs could protect UK producers, such as certain ceramics, fertiliser and fuel.
Stephen Phipson, Chief Executive of Make UK, the manufacturers’ organisation, described the tariff announcement as “dramatic” and said affected businesses would need additional support to help them adapt their supply chains.
Additional Spring Statement announcements relevant to manufacturers included:
- UK Export Finance (UKEF), the UK’s export credit agency, will launch a new ‘General Export Facility’ that will allow it to support exporters’ overall working capital requirements, rather than having to link support to specific export contracts. This will ensure a wider range of exporters will be able to benefit from support, notably smaller businesses and companies with shorter manufacturing cycles.
- To help small businesses take on more apprentices, reforms to the national apprenticeship scheme announced at Budget 2018 will be brought forward to 1 April 2019. The changes mean small employers will only pay 5 per cent of the cost of training apprentices (down from 10 per cent), with the government picking up the remainder of the bill. Larger employers paying the Apprenticeship Levy will be able to share more of their levy fund across their supply chain, with the maximum amount rising from 10 per cent to 25 per cent.
- A consultation for a new Business Energy Efficiency Scheme was launched, which will help small commercial and industrial businesses cut their carbon emissions and energy bills through building improvements.
- In a move that will affect manufacturers in the construction and energy supply chains, the government also announced plans to introduce a ‘Future Homes Standard’ from 2025 that would ensure all new build homes had low carbon heating and “world-leading levels of energy efficiency”.
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