Eight Associations Alliance Calls for the Chancellor and Secretary of State for Trade and Industry to hold . . .

BRITISH PLASTICS FEDERATION

PRESS RELEASE

BPF PR REF: 09/07

Date: 7th March 2007

Eight Associations Alliance Calls for the Chancellor and Secretary of State for Trade and Industry to hold a Manufacturing Summit

The Eight Associations Alliance of plastics, rubber, coatings and associated machinery and tool making sector have in pre-budget letter called upon the Chancellor and Secretary of State for Trade and Industry to hold a Manufacturing Summit. The Summit would act as a platform to address views and proposals raised in the letter to the Chancellor.

The Letter informs the Chancellor that the associations’ members report mixed views on the prospects for the next 12 months, with some marginally more optimistic due to falling energy prices, and reasonable business volumes, whilst others report declining order books and severe pressure on selling prices. The strength of Sterling, a 5½ year high for interest rates and an above EU average inflation rate put further strain on the associations’ members.

It is noted that Public Sector spending is at its highest rate since the 1970’s, 45.3% of the total UK economy in 2007 and a net public sector borrowing requirement of £39.7bn. The associations urge the Chancellor not to resort to higher taxation on wealth creating business to fill the void.

Unemployment and Skills Shortages

Unemployment and skills shortages form a key area of concern in the letter. It states already in 2007 8000 manufacturing jobs have been lost according to The British Chambers of Commerce, and a 14.5% rate of youth unemployment is reported. This combined with a skills shortage, over 5 million UK working age adults have no qualifications and lack functional literacy, are a major problem for employers. The letter accepts the Government is attempting to address this situation but points out that funding is being dissipated over to many initiatives, limiting its impact on the ground.

Regulatory Burden

The correspondence also highlights the excessive, cumulative regulatory burden on UK companies currently standing at a punitive £55.6bn for British business according to figures by The British Chamber of Commerce. In 2006 the PM announced that Whitehall would cut the cost of compliance with its rules by 25% by 2010, the latest of many pledges, yet it states nothing appears to have reduced the burden on companies. The associations strongly urge the Government to appoint a De-regulation Minister to guarantee that tough deregulation targets are met annually.

Energy and Taxation

Energy and taxation are also stated to be decisive factors to the associations’ members. Since October 2006 members have experienced energy price increases of 20%, whilst the price of wholesale gas continues to fall: the associations hope to see considerable reductions in the near future. The tenuous nature of UK energy supplies has not been tested due to the mild winter. However, the lack of gas storage, nuclear capacity and energy from waste capacity must be tackled to avoid the risk of power cuts and high costs.

The letter also urges the Chancellor to revoke the increase in the Climate Change Levy scheduled for 1st April 2007 and change the criteria for the Climate Change Agreement to deal with unfairness.  This combined with the highest energy prices in Europe is damaging the international competitiveness of manufacturing.

Trade and Investment

The fact that manufacturing investment fell 4.5% in the last quarter of 2006, due to tight margins is also highlighted. The associations are extremely concerned that their members are not able to invest in new equipment necessary to maintain productivity and competitiveness, and urge the Chancellor to raise capital allowances to increase capital investment.

Further concern is expressed at the huge UK Trade Deficit in goods of £84.3bn last year, a rise of 23% from 2005 and 5.3% of GDP. UK manufacturing now accounts for less than 15% of GDP. It is essential that more is done by the UKTI to support UK companies at exhibitions and trade missions.

Click at the bottom of this page to view the letter in full

ENDS

For further information on this press release, please contact Thom Lant, British Plastics Federation, 6 Bath Place, Rivington Street, London, EC2A 3JE, tel 020 7457 5032, fax 020 7457 5001, email: [email protected]

Notes for editors

1) British Plastics Federation (BPF) is the UK trade association for the plastics industry – representing the whole supply chain including polymer producers, distributors, additives suppliers, machinery manufacturers, processors and recyclers.

2) The eight manufacturing associations are: The British Plastics Federation (BPF), British Rubber and Polyurethane Products Association (BRPPA), Packaging and Films Association (PAFA), Gauge and Toolmakers Association (GTMA),  British Coatings Federation (BCF), Polymer Machinery Manufacturers Association (PMMDA), Northern Ireland Polymers Association and Scottish Plastics and Rubber Association (SPRA)  together represent the plastics, rubber, coatings and associated machinery and tool making sectors. Representing 315,000 employees from 6,150 companies with a sales turnover of £23bn per annum.