Levelling Up News: 11 December
This is the fortnightly newsletter from the Levelling Up Taskforce. If it’s been forwarded on to you, you can subscribe using the link below. If you don’t want to get this, just click the link at the bottom to unsubscribe.
NEWS OF THE WEEK
Progress on the Lifetime Skills Guarantee. Next year, 400 free courses - from engineering to construction to healthcare - will become available. These are fully-funded and are open to all adults without a Level 3 (A-level equivalent) qualification. (Gov.uk)
700 SMEs sign up to provide ‘Kickstart’ placements with help from the Federation of Small Businesses. Smaller firms and sole traders will be better able to offer work placements to unemployed 16-24 year-olds. (FSB)
Government announces a £20 million fund to expand medicines manufacturing. Two-thirds of life science manufacturing jobs are located outside London and the South East. (Gov.uk)
VIEW OF THE WEEK
Alan Mak MP
Capital allowances enable a business to deduct the cost of qualifying items from their profits, lowering their corporation tax bill. This incentivises businesses to make investments in key productive goods, from machines to laptops, boosting economic growth and job creation – the key to Levelling Up.
The Annual Investment Allowance (AIA) is the annual cap on such deductions and its level has varied dramatically in recent years from £25,000 in 2012 to £500,000 in 2015. Until December 2018, the AIA was £200,000 but it was raised to its current £1M level from January 2019. The £1 million level was due to expire this December.
I have campaigned for the last six months to have the £1M cap extended. This would benefit business across the country, especially our manufacturers and SMEs. My ConservativeHome article sets out the arguments and the Treasury’s extension announcement is here.
Investing in the newest technology also enables our SMEs to keep up with larger businesses in the UK and their international competitors.
Replacing a diesel-powered machine on the factory floor with one powered by electricity, or digitising a production line by adding new software powered by artificial intelligence (AI), are examples of investment that are encouraged by the extended AIA ceiling.
Alongside the £1 million cap extension, the scope of what can be claimed through capital allowances should also be expanded to take account of the growing digital dimensions of every business. For example, digital tools purchased on a subscription basis (such as monthly website hosting costs) should benefit from relief not just one-off investments in physical goods (such as buying a new machine).
MAP OF THE WEEK
Estimates of gross fixed capital formation (GFCF) by companies in the manufacturing sector show that much of this investment is concentrated in parts of the Midlands. (ONS)
STATS OF THE WEEK
New analysis of towns in England and Wales identifies a cluster of high-growth towns around London and a corridor of low-growth towns stretching from South Lancashire to West Yorkshire. (ONS)
Between 2009-2019, employment declined in half of towns in the North East and South West, but only 25% of towns in the South East.
44% of towns in the North East have low job density and high income deprivation, compared to 9% in the South East.
But it isn’t always a clear North-South divide.
In the East of England, 39% of towns had above-average employment growth, the highest across England and Wales.
But the lowest share was in the South West region at 21%.
ABOUT US
The Taskforce is made up of more than 60 (and growing!) Conservative MPs from constituencies right across the country.
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