Budget is an inadequate fix for manufacturing, says University expert

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Chancellor George Osborne’s budget for ‘makers’ fails to tackle the obstacles needed for a resurgence in British manufacturing, according to an expert at the University of Sheffield.


Dr Craig Berry, of the Sheffield Political Economy Research Institute (SPERI), said while today’s spending announcement offered some substantial measures to support manufacturing – including allocating £7 million to cut manufacturers’ energy costs and doubling the investment allowance – they did not go far enough.

Giving his reaction to the budget, he said: “I think the key change needed is to reorientate the way we do investment – for example, bank lending and offering incentives for institutional investors to invest in manufacturing.

“At the moment institutional investors have quite skewed incentives. They are encouraged to choose safer, risk-free assets because of certain funding requirements in the regime they’re regulated by.

“There’s nothing in the budget to address that. The long-term health of the sector relies on greater investment.”

Dr Berry also gave his views on radical pension reforms announced in the budget, saying they fail to tackle the ‘highly dysfunctional’ annuities market.

Mr Osborne revealed rules around pension savings are to be relaxed, so people will find it easier to cash in smaller pension pots and no longer feel forced to use their savings to buy an annuity.

Those approaching retirement will get free financial advice and will be able to draw down as much of their defined contribution fund as they want, even if they are in line for relatively small incomes.

Dr Berry said: “The pension annuities market is highly dysfunctional, so it's no surprise that many savers will welcome today's announcement that the compulsion to buy an annuity will go.

"But we must not overlook the fact that lower-income savers do not have the luxury of not buying an annuity.

"There is a clear need to make the market fairer for low earners, rather than simply allowing high earners to circumvent it altogether.

“The right to advice on annuities announced today is a welcome step forward in this regard, but falls woefully short of overcoming the inherent flaws evident in the annuities market."

Watch our video to hear more of Dr Berry’s thoughts on today’s budget.

Additional information

Contact

Hannah Postles

Media Relations Officer

University of Sheffield

0114 222 1046
h.postles@sheffield.ac.uk

Dr Craig Berry, of the Sheffield Political Economy Research Institute (SPERI), said while today’s spending announcement offered some substantial measures to support manufacturing – including allocating £7 million to cut manufacturers’ energy costs and doubling the investment allowance – they did not go far enough.

Giving his reaction to the budget, he said: “I think the key change needed is to reorientate the way we do investment – for example, bank lending and offering incentives for institutional investors to invest in manufacturing.

“At the moment institutional investors have quite skewed incentives. They are encouraged to choose safer, risk-free assets because of certain funding requirements in the regime they’re regulated by.

“There’s nothing in the budget to address that. The long-term health of the sector relies on greater investment.”

Dr Berry also gave his views on radical pension reforms announced in the budget, saying they fail to tackle the ‘highly dysfunctional’ annuities market.

Mr Osborne revealed rules around pension savings are to be relaxed, so people will find it easier to cash in smaller pension pots and no longer feel forced to use their savings to buy an annuity.

Those approaching retirement will get free financial advice and will be able to draw down as much of their defined contribution fund as they want, even if they are in line for relatively small incomes.

Dr Berry said: “The pension annuities market is highly dysfunctional, so it's no surprise that many savers will welcome today's announcement that the compulsion to buy an annuity will go.

"But we must not overlook the fact that lower-income savers do not have the luxury of not buying an annuity.

"There is a clear need to make the market fairer for low earners, rather than simply allowing high earners to circumvent it altogether.

“The right to advice on annuities announced today is a welcome step forward in this regard, but falls woefully short of overcoming the inherent flaws evident in the annuities market."

News Source : Budget is an inadequate fix for manufacturing, says University expert

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