Manufacturers need to plan now for £1k New Year jobs bonus

Johnathan Dudley, who is also Midlands managing partner at Crowe, said: “At Crowe, we have been campaigning for some time about the need for businesses to work at 'getting back on track'.

“But we understand that this will carry a cash cost that far exceeds the range of existing COVID-19 financial support provided by the government.

“In his recent statement, the Chancellor announced a bonus of £1,000 per furloughed employee still employed in January 2021.”

He added that while it makes no financial sense to keep someone on the payroll that the business cannot use until that time, the grant applies to everyone who has been furloughed since the beginning, providing they have earned a minimum of £520 per month between the end of the job retention scheme and the end of January 2021.

He was speaking after the latest of a series of nationwide video conference calls that bring manufacturers together to discuss the challenges facing their industry.

Mr Dudley, based at Oldbury, chairs Crowe’s regular Manufacturing Business Network, which is currently meeting via regular fortnightly video calls. He also leads on Crowe’s annual Manufacturing Outlook Report and is chairman of the ICAEW Manufacturing Community.

He said: “A manufacturer who closed for, say, three weeks back in March with a staff of 70, may still legitimately plan to gainfully employ at least half that number by January 2021 and that will generate a £35,000 grant, guaranteed from the government.

“By carefully planning now you can use that bonus to help get your business strategically back on a new track, as your business works through its recovery programme.

Steve Morley, president of the West Bromwich-based Confederation of Metalforming, said they thought the Government needed to go a lot further, especially in stimulating manufacturing markets.

“The CBM has welcomed the support of the Government to date and the latest announcement is more welcome support.

“The job retention bonus of £1,000 will be a boost for some firms, but it may favour the larger firms who had hundreds on furlough, rather than the smaller firms.”

He added that this could also add a twist to the already vexed question of who to make redundant and when.

“It’s inevitable that most companies will be making redundancies, but who do you keep on – the person who was furloughed rather than the employee who wasn’t?”

He stressed that an upturn in orders was the crucial factor in determining how manufacturing emerges from the economic turmoil created by the pandemic.

“What our members really want to see is a stimulus to support manufacturing in the automotive and aerospace sectors that will create a revival in orders.

"We are calling for a substantial VAT cut, and sooner rather than later, to get the market moving.

“The stimulus also needs to support capital investment, and not just through over-subscribed Innovate schemes which cherry-pick preferred options.”

He is also echoing MrDudley’s call for more emphasis on re-shoring work back to the UK.

“With state aid rules in Europe ending in December, the timing is right to move on this and create incentives to keep work in the UK and bring other work back to these shores. This will bring dividends to HM Treasury in the long run," he said.

The next of Crowe’s Manufacturing Business Network video conference calls is on Friday, August 24, at 1pm. Contact Nathan Sanghera on nathan.sanghera@crowe.co.uk or call 0121 543 1900 to take part.