Industry Powers Ahead with Green Investments, Says Make UK
The manufacturing industry in Britain is making strides towards a greener future, with most companies gearing up to invest heavily in sustainable technologies over the next five years.
A recent report from Make UK, titled “Manufacturing a Sustainable Future – Capitalising on Green Technologies,” reveals that more than 80% of manufacturers are planning to weave green growth initiatives into their operations, with renewable energy taking the lead as their top priority. In fact, a previous survey by Make UK found that a whopping 92% of firms believe transitioning to net zero is crucial for their business success.
However, the report points out a significant hurdle: the current business rates system. When companies invest in clean technologies like solar panels, wind turbines, and low-carbon heating systems, they often face higher rateable values. This means that businesses are essentially penalized for making eco-friendly upgrades.
To tackle this issue, Make UK is calling on the Government to exclude green investments from business rate calculations. They warn that if action isn’t taken, it could slow down industrial decarbonisation and put national net zero targets at risk. Nearly 44% of manufacturers say this problem is stalling their investment plans, even more so than high energy costs, which concern 41% of them.
Despite their growing commitment, UK manufacturers are still grappling with energy costs that are disproportionately high—four times those in the United States, nearly two-thirds higher than in France, and a quarter more than in Germany. While the upcoming British Industrial Competitiveness Scheme (BICs) aims to address these issues, it won’t be in effect until 2027. Make UK emphasizes the importance of long-term investment in clean energy and energy security to maintain global competitiveness.
Verity Davidge, who serves as the Director of Policy at Make UK, expressed her thoughts by saying:
“Manufacturers are clearly dedicated to adopting green technologies to save on costs and reduce emissions. However, it’s quite ironic that these investments lead to increased business rates. This actually discourages companies from taking the right steps.”
Davidge urged the Government to eliminate these disincentives and to expand R&D tax relief to encompass decarbonisation projects, paving the way for a fresh wave of green investment.
The report highlights the top green investment priorities for manufacturers as follows:
- Renewable energy (49.7%)
- Greener materials for supply chains (41.1%)
- Digitalisation (35.6%)
On the international front, Germany and France are at the forefront of Europe’s embrace of green industrial technologies, backed by an EU green industrial plan that invests over £87 billion. In contrast, Japan has mobilised more than £700 billion in public-private funding to facilitate its transition away from fossil fuels, with one in four Japanese companies now incorporating green technologies into their supply chains.
To boost green growth, Make UK suggests:
- Extending Green Investment Relief from 12 months to 3 years, which aligns better with the typical returns on green technology.
- Revamping apprenticeship programmes to include emerging green technologies, ensuring the future workforce is equipped with vital skills.
- Broadening R&D tax relief to cover capital equipment for automation and decarbonisation.
- Permitting full expensing for leased or refurbished plant and machinery.
Make UK concludes that significant policy reform—especially regarding business rates and energy costs—is crucial for Britain’s manufacturers to fully tap into their potential in leading the UK’s green industrial revolution.
