Just two weeks ago Osborne dropped Budget plans which could have helped steel industry - Angela Eagle

[labourpress]

The plans would have given companies an allowance on business rates for plant and machinery – a move that could have helped the struggling steel sector – but they were pulled before George Osborne delivered his Budget.

Angela Eagle, Labour’s Shadow Business Secretary said:

“This month’s Budget was a missed opportunity by the Tory Government to help the steel industry at this difficult time.

“The Government should be doing everything possible to protect the industry but these latest revelations reveal the Tories have no strategy for steel. It’s clear that steel workers in the UK are paying the price for the Tories’ wrong priorities.

“The Government now needs to do whatever it takes to save this vital strategic industry which is the cornerstone of our manufacturing sector.”

Ends

Background:

·         Before the Budget, the EEF (the manufacturers’ organisation) called for plant and machinery to be removed from business rates calculations. This, they argued, would “provide a boost to highly capital intensive sectors such as steel”.

“Britain’s manufacturers are calling for the reform of business rates in this week’s Budget by the removal of plant and machinery from rateable calculations. In particular, this would provide a boost to highly capital intensive sectors such as steel.”

EEF, 14 March 2016, https://www.eef.org.uk/about-eef/media-news-and-insights/media-releases/2016/mar/survey-backs-industry-calls-for-business-rates-reform-in-budget

·         The EEF argued that the inclusion of plant and machinery in calculating a business’s rateable value “represents a tax on investment” and pointed out that if a manufacturing business in the steel sector were to invest in a blast furnace, this would increase their business rates bill.

“According to EEF, at present the inclusion of plant and machinery represents a tax on investment. For example, if a business increases its investment in ‘rated’ plant and machinery, such as a blast furnace in the steel sector, that increases their rateable value and, with it, their business rates bill.”

EEF, 14 March 2016, https://www.eef.org.uk/about-eef/media-news-and-insights/media-releases/2016/mar/survey-backs-industry-calls-for-business-rates-reform-in-budget

·         It has now been revealed that Chancellor George Osborne pulled plans to take action on this in the Budget just two weeks ago and u-turned on a policy that would have given companies an allowance on business rates for plant and machinery – a move that could have helped the struggling steel sector. The report in the Times suggests the move was partly a result of George Osborne’s aim to achieve a £10 billion surplus by the end of the Parliament.

“George Osborne pulled plans to give Britain’s struggling factories tax relief on business rates from the budget at the last minute as he aimed for a £10 billion surplus in the final year of the Parliament.”

The Times, 29 March 2016, p.40

“Government sources said the policy would have given companies an allowance on business rates for plant and machinery. At present, any investment in machinery or the structure of a factory adds to its value and is subject to business rates.”

The Times, 29 March 2016, p.40

·         Following the Budget the EEF Chief Executive, Terry Scuoler, said the failure to take action on plant and machinery in the context of business rates was “a disappointment for the steel industry” and warned that the Government would need to do more to support the sector.

“The continued inclusion, however, of investment in plant & machinery in business rate calculations is a disappointment for the steel industry in particular. Government will need to do more to support steel this year.”

Terry Scuoler, Chief Executive, EEF, 17 March 2016, http://www.scunthorpetelegraph.co.uk/Tata-Steel-Steel-chiefs-respond-Budget-2016/story-28943595-detail/story.html