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Failure to extend will leave UK out of step with competitors and risk recovery in the slow lane

The Job Retention Scheme must be extended for critical, strategic industrial sectors or risk the loss of key skills leaving the UK in the slow lane behind major competitors in recovering from the pandemic.

The call was made by Make UK on the back of its latest Manufacturing Monitor tracking survey which shows strong support for the measure from industry with over 62% of companies either agreeing or strongly agreeing with the proposal. Just under 14% of companies surveyed disagreed with the proposal.

Furthermore, almost a quarter of companies (22.8%) of companies said they disagreed with the Government’s decision to end the Scheme and that it should be extended to critical sectors, while 17% said it should be extended to any business. A further quarter (25.9%) said it should be continued should there be further lockdowns or a second wave while almost a further fifth (17.9%) said the scheme should end but another support scheme should be put in its place.

Make UK also believes that an extension to the scheme may help avoid a second wave of redundancies which the survey shows are in the pipeline. Over two fifths of companies (42.4%) of companies asked said that they have already made redundancies while almost a further third (30.2%) said they intend to in the next six months with just over another third of companies (35.6%) saying they may do. 

In particular, Make UK believes that the Aerospace and Automotive sectors are those most in need of an extension. These sectors are at the cutting edge of technologies which will be vital to growth sectors of the future employing many highly skilled, well paid people across the UK. New analysis of official data by Make UK backs this up with the two sectors being the largest investors in research & development, accounting for more than two thirds of the total spend (36.4%). This is worth £5.9 billion to the UK economy.

The sectors are also among the hardest hit by the pandemic with many job losses already announced and output/growth in the automotive and aerospace sectors forecast to fall by 33% (£4.6bn loss in value) and 14% (£1.1bn loss) respectively.  

Make UK added that similar schemes in Belgium and Germany have already been extended to the end of the year and the end of 2021 respectively, while the Australian Government has also announced an extension to their JobKeeper Payment until March next year. France has also introduced a new long-term short-time work scheme for agreement between employers and unions in specific sectors where collective agreement can be obtained. This has been created for companies facing a lasting drop in their activity and sits atop the ordinary short-time work scheme which will be still available. 

These figures lay bare the overwhelming importance for manufacturers of trade with our closest market and the need to avoid imposing any barriers which will make this more difficult.

Whilst the United States remains the biggest market and presents significant opportunities for export growth, it is a fallacy to believe that geography is not the biggest factor driving trade. For UK manufacturers, access to their biggest market must be a premium.

The figures also provide an important reminder that we're still one of the top ten biggest manufacturing nations and we want to see policy makers working with industry to help move UK manufacturing up the rankings.
Stephen Phipson Chief Executive, Make UK
The survey does provide some encouraging signs in line with other recent economic indicators of an improvement in business conditions. Almost a fifth of companies are now at full operating levels (17.6%) while a further 28% are operating between three quarters and full capacity. Looking forward over a quarter (27%) expect to be at full capacity at the start of 2021 while a further third (35.4%) expect to be between three quarters and full capacity.

Furthermore, the number of companies who expect normal a return to normal trading conditions of twelve months or longer has dropped for the first time. Having been on a steadily upward trend from 16% since April to reach a peak of 42% in the last survey the figure has now dropped to just over a third (36.7%). While Make UK cautioned that this is still more than double the level in the first tracker it hopes that it may be the start of a more encouraging trend downwards.

The survey covered 226 companies between 24 August and 1 September

View Manufacturing Monitor here


News / Make UK / Manufacturing / Media release