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Who Isn’t Panicking Post-Brexit? Chemists & Pharmaceuticals, That’s Who! (But Apprenticeship Levy Needs More Thought)

They may not have had the greatest second quarter this year but Britain’s chemical and pharmaceutical companies aren’t panicking, according to the latest Chemical Industries Association member company business survey.

The survey highlighted “worries or uncertainty over future relations with the (European) Union”, and indicated that some businesses had decided to reign in investment, but despite this an encouraging 89% of respondents said that they felt investment into R&D would either remain the same or increase.

87% of the sector’s business owners surveyed believed that the volume of exports would either remain the same or increase, and 80% said the same about sales.

Three quarters of companies said that they would be increasing capital investment expenditure, whilst 71% anticipated that employment levels would remain the same / increase.

The survey was entirely completed after the UK’s vote to leave the EU, but business owners lost no opportunity to find reasons to be positive.

Members reportedly felt that “there were opportunities for growth through expanded production capacity, or through new products coming on-line”, and that other operational improvements were likely.

In addition, the lower value of sterling, which hit a 31 year low against the dollar shortly after the referendum vote, but has since strengthened slightly to around 1.3, is expected to help boost exports, described as “a vital driver of growth for the UK’s leading goods export sector” – albeit the cost of importing goods will increase.

“It is right we acknowledge that we are in uncertain times while the country exits the European Union, but our survey shows that there is still confidence that the UK can be a good place to do business,” said Steve Elliot, Chief Executive of the Chemical Industries Association.

He added: “the products and technologies of our companies are vital enablers to the rest of manufacturing. I hope the views of our business leaders will further support the wish for all of manufacturing to invest in the UK and that the government will do all it can to make it even better for companies to invest here.”

According to the Chemical Industries Association (CIA) Britain’s chemical and pharmaceutical companies add £15 billion of value to the UK economy per annum, with total annual turnover reaching roughly £50 billion.

The sector is also the UK’s largest manufacturing exporter with annual exports touching close to £50 billion.

The Chemical Industries Association, located in Westminster, represents the interests of chem and pharma companies throughout the UK, providing lobbying and the provision of advice and services to members, who are expected to adhere to Responsible Care principles for manufacturing and product stewardship during transportation and use along the value chain. 70% of the companies it represents are headquartered overseas.

Thumbs down on implementation of new Apprenticeship levy

The CIA also recently joined with fellow industry leaders and charities to ask for a review by the new Secretary of State for Education, Justine Greening, of the Apprenticeship Levy. A letter sent to the minister by the CIA and various other industry groups criticised “promised and delayed guidance, potential lowering of quality and the lack of availability of the required payroll software” and suggested the government “take a considered pause and work with charities, industry and other stakeholders to ensure the levy is fit for purpose, until which time the levy should not go ahead.”

The Apprenticeship Levy is slated to come into effect in April 2017, at a rate of 0.5% of an employer’s pay bill, with a £15,000 allowance meaning that only employer’s whose pay bills exceed £3m (less than 2% of companies) will be expected to pay it.

CIA Chief Executive Steve Elliot commented “We all want to see more apprentices and we all believe a levy could be part of the solution. The delay we are seeking will allow for what at the moment is a confused mechanism that has the potential for creating fewer apprenticeships, to become part of an effective solution.”

 

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