Manufacturing welcome for furlough scheme extension
12 May 2020
Make UK chief executive, Stephen Phipson has applauded the Government’s extension and changes to the Job Retention Scheme.
The government announced its furlough scheme to help UK businesses struggling to combat the economic effects of COVID-19 will run until the end of October. It is estimated that around 47% of British firms have accessed the scheme so far.
Said Phipson: “I applaud this announcement which avoids a looming cliff edge triggering significant redundancies for many companies and recognises the need for greater flexibility as the economy fires up. Government has been very supportive of business since the start of the crisis and it's encouraging that it stands ready to stand behind industry to protect jobs and key skills over the summer and autumn.
“Along with other business groups, we have called for these enhancements to the scheme and are very pleased the Chancellor has responded so positively.”
Business cloud accounting firm Sage’s says its SME Tracker reveals nearly two thirds of small to medium enterprises currently depend on the furlough scheme.
The tracker, which assesses business sentiment across the UK on a weekly basis, revealed that its survey showed:
62% of SMEs are using, or planning to use, the Job Retention Scheme
Of those using it, 70% have furloughed more than half their staff
More than a third say extension will be the most important measure to help them get through the next few months
Managing director of Sage UK&I Sabby Gill said the JRS had been a highly effective form of support for the SME community and we welcome this extension of the scheme, which should provide vital ‘breathing room’ for businesses across the country.
He stated: “A large part of the UK private sector – and its employees – are leaning heavily on this system and it is right not to pull the rug from under their feet.”
However, he said the study revealed a clear preference for an extension to the Scheme that allows firms to return employees gradually, at reduced hours or after shorter furlough periods – a factor addressed by the extension terms from August onwards.
“We expect many SMEs that are resuming a level of operations will be looking to bring back workers part time before August. 44% still expect their business to make less than 50% its normal level of sales in spite of the new government guidance on getting back to work. Therefore, some may struggle to pay full time salaries as we enter the next phase.
He revealed that 44%of SMEs responding said they expect to be making less than half their normal level of sales, which he said suggested the need for sustained further support.
Make UK’s Phipson added: "There is no silver bullet to any of this and both Government and industry are going to have to be adaptive, creative and flexible through what is likely to be a bumpy and turbulent flight into the future from now on. This is going to require a range of policies starting with today's extension of the Job Retention Scheme, followed by a three stage plan to get the economy up to full speed by later in the year.
“We will continue to work in partnership with the Chancellor as we navigate these unprecedented challenges.”