Environment

Some of the packaging industry’s leading lights have slammed Gordon Brown’s Budget, saying it shows the government’s lack of understanding of manufacturing.

The biggest bone of contention is the Chancellor’s scheme to reduce capital allowances for long-life plant and machinery from 25% to 20%, and to abolish industrial buildings allowance in stages from 2008 to 2011.

Brown also announced a 2p reduction in the rate of corporation tax, but at the same time, tax on small companies will rise by the same amount by 2009.

Landfill tax will increase from £24 a tonne by £8 each year from 2008 until at least 2010.

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INDUSTRY REACTION TO THE BUDGET
Dick Searle, chief executive, Packaging Federation
The tinkering with capital allowances shows how little the government understands the contribution manufacturing makes. The landfill tax rise was widely expected. However, we have an industry that’s geared for recycling, but the real issue is that the infrastructure can’t cope with demand.

Peter Davis, director general, British Plastics Federation
Even with the corporation tax cut, business tax in the UK is still higher than the European average. We failed to persuade the Chancellor to abandon an increase in the climate change levy and plastic packaging is at a particular disadvantage as we are not as energy intensive as some of the other materials.

Tony Woods, director, Metal Packaging Manufacturers Association
Other than the reduction in corporation tax, there’s no other signal that the government recognises the importance of manufacturing. A lot of packaging manufacturers are owned by overseas companies, and our concern is that we could see investment going overseas.

Mark Kerridge, managing director, Benson Box
The reductions to writing-down allowances on plant and equipment and the abolition of industrial buildings allowances significantly offset the reduction in corporation tax. An increase in landfill tax based on weight will encourage the supply chain to source lighter, not necessarily “greener”, packaging.