Labour’s Budget hammer blow to business could spark a wave of automation with men replaced by machines.
Tony Hague, boss of PP Control & Automation, one of the world’s leading strategic manufacturing outsourcing specialists, predicted the tax bombshell would reshape UK manufacturing.
Automation is the use of technology to slash human involvement in labour-intensive processes, using machines or computers to perform tasks instead of people, or using electronics and computer systems to control machines.
And in a dire warning of what could lie ahead, he said a £25 billion annual rise in employers’ National Insurance Contributions [NICs] would see firms grapple with a double whammy of high operational costs and widespread skills shortages.
He said: “Automating repetitive, high-labour tasks can lead to substantial savings, including NICs, wages, and training investments, while also freeing up team members to take on higher value tasks.
“Machines also offer consistent performance with minimal error, contributing to higher product quality and fewer costs associated with rework or quality control. You can also easily manage fluctuations in demand, whether that is scaling up or scaling down.”
The company, which operates from the West Midlands, is one of the UK’s leading strategic outsourcing manufacturing specialists, helping build machines that robotically milk cows, provide packaging solutions, and cut parts used in F1 cars and the world’s airlines.
It is currently shifting through inquiries from companies operating in the clean energy, agritech, and warehouse automation sectors keen to see how outsourcing can shift fixed costs.
Mr Hague said: “Rather than investing in an in-house team for every phase of production, manufacturers might contract with outsourcing partners for supply chain management, engineering and production requirements.
“The strategic shifts I believe will now play out will enable manufacturers to transform traditionally rigid cost structures into agile frameworks, allowing them to respond effectively to both current challenges and future demands.
“She probably didn’t realise it at the time, but the Chancellor’s employment tax rises could well have given the UK the biggest push towards automation and outsourcing we’ve seen in decades.”