Section A- UK Manufacturing: Impact of Government Policy

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Impact of Government Policy- Bulletpoint 4

Positive Impact

Tight regulation on pharmaceuticals gives a global reputation-Glaxo. The MHRA (Medicines and Healthcare products regulatory Agency) ensures all medicines produced in the UK have to pass strict safety tests. As a result British pharmaceutical products are trusted all over the world by customers in China and the USA for example leading to high sales. 

Environmental policy- Plug in Car Grant- The plug in car grant reduces the price of fully electric cars for consumers as the government subsidises £5000 off the full price therefore a Nissan leaf costs a customer £23.000 instead of £28,000 thus making the car more affordable. The car market is price elastic due to the high competition. This could be why the Leaf has 55% of the UK electric car market. 

Regional policy- grants for Nissan- In 2001 a £40m grant was provided due to the jobs created in a high unemployment area. This means that less start up capital is required by Nissan UK Ltd meaning that less borrowing is needed. Lower gearing meand less interest is paid which lowers overheads. This is important as the market is price elastic so lowering costs is vital to keep prices competitive. 

Patent Box - GlaxoSmithKline. This policy has encouraged companies to locate in the UK and transfer much of their global R&D efforts to the UK so that tax breaks are given against R&D expenditure. By paying only 10% corporation tax on patented products it allows more finance to be retained in the firm or paid out in dividends and shareholders.

Modern Apprenticeships- Small companies with less than 50 employees can up to 5 grants of £1500 each for taking on a apprentice. This will add to the pool of job specific skilled Labour in the UK which will help firms like CCE find the skilled engineers required to work with new automated systems on their bottling line. This makes recruitment easiers and puts less pressure on the firm to increase pay levels

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