Show Hide image

UK way behind Germany and Italy in robotics

The problems holding back automation in the UK are deep rooted, says Christopher Buxton.

The UK car industry uses just 622 robots per 10,000 workers, compared with almost twice that in Germany and Italy, according to the figures released by the International Federation of Robotics (IFR).

As per the figures, there are just 27 robotic units per 10,000 manufacturing employees in the UK, compared to 137 in Germany, 113 in Italy, and 59 in France.

Christopher Buxton, chief executive of the British Automation and Robot Association, says that the situation is desperate.

The UK is lagging behind several European and Asian countries partly because the number of small businesses in the country’s manufacturing sector employ less than 50 people, according to a research from Manchester University’s Centre for Research on Socio-Cultural Change.

In addition, most robots sold in the UK cost between £30,000 and £50,000, putting the smaller firms out of their reach.

 “If you’re that small you’re worrying about where the next order is coming from and whether you can pay the rent on the warehouse”, Buxton said. “[SMEs] are understandably very risk averse, and don’t always have time to research the technology”.

New robotics installations in the UK doubled in 2012 to 2,477, according to BARA data, but four in five were in the car industry. Elsewhere, installations have plateaued in recent years.

The UK food sector, which employs about 400,000 people, adoption of robotics is at a smaller scale. According to IFR, there were 100 shipments of robots to UK food companies in 2011, compared to France’s 270, Spain’s 308, Germany’s 442, and Italy’s 658.

Bob Hinchcliffe, managing director of robotic automation systems provider Quasar, said his customers are increasingly under pressure from more efficient continental competitors.

Hinchcliffe told the Financial Times: “In fresh and chilled food, a lot [of manufacturers] thought that strip of water between us and Europe was enough to prevent that type of product coming in, but with improvements in wrapping material you’re getting a longer shelf life. An extra day is enough.”

David Jahn, director of automated packing manufacturer Brillopak, told the Financial Times: “Food manufacturers have been dominated by a few large supermarkets, who put constant pressure on [supplier] margins. The challenge for manufacturers is they want to invest in automation, but this means high capital costs which they recoup over 2-3 years . . . but the supermarkets insist on very short-term contracts.”

Mike Wilson, a UK-based sales manager for ABB, said that British food manufacturers have got by on cheap and flexible labour allowing them to achieve productivity growth without automation. Wilson said: “It’s a vicious circle, because we [the UK] don’t have a large automation base, we don’t have a large supply chain, and therefore we don’t have the strength and expertise to develop the technology.”

In January 2013, science minister David Willetts pledged £35m of investment in robotics centres of excellence to link universities and industry. He identified robotics as one of eight great technologies that will share £600m of new funding.

Japan has the highest operational stock of industrial robots in the world. IFR valued the global market for robotics at $25.5bn in 2011.

Show Hide image

Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.