Yorkshire Post Manifesto: Manufacturing

For companies who already struggle to pass on higher operating costs to their customers, the growing complexity of the tax system has made it harder to achieve the profits needed to fund investment.

Engineering and manufacturing body the EEF accused the Government's taxation plans of being without "direction and predictability" after this year's Budget.

Although Alistair Darling announced a series of tax incentives aimed at supporting small companies and manufacturers, it was felt that there was still uncertainty about what tax and spending decisions may be around the corner.

The manufacturers' organisation wants to see changes to capital gains tax, cuts in the headline rate of corporation tax to 25p over five years, raising the VAT rate to 20 per cent to encourage and returning the top rate of tax to 40p.

The region's manufacturing sector employs 325,800 people.

Manufacturing in the region is worth 1.4bn to the UK economy

The UK ranks 59th in the world for the amount of total tax paid.

Manufacturing is expected to grow by1.5 per cent and by 2011 to have risen to 3.6 per cent.

CASE STUDY: LOWERING TAXES

Like many other Yorkshire manufacturers Group Rhodes is facing squeezed margins owing to increasing taxes.

The Wakefield-based company warned that rising taxes had reduced the amount of money available to reinvest.

Managing director Mark Ridgway said: "There is a tremendous amount of tax burden. I can't understand the increase in National Insurance. It's completely self-defeating. We are looking to ensure continuity of our personnel."

Group Rhodes, which employs 190 staff, has a turnover in excess of 15m, largely as a defence contractor although it won a contract to provide machinery for a new 700m waste and energy site being built at South Kirkby, Wakefield.

Mr Ridgway said: "I would like to see the research and development tax credit scheme developed."