Chancellor Rishi Sunak’s Summer Statement 2020: The manufacturing industry reacts

Posted on 9 Jul 2020 by James Devonshire

The Chancellor Rishi Sunak has announced a raft of measures in his Summer Statement 2020. We outline the areas of the mini-Budget that will potentially impact the manufacturing industry and hear how the sector is reacting to the announcements.

Jobs & training

As part of his ‘Plan for Jobs’, Chancellor Rishi Sunak announced a number of initiatives and schemes designed to spur the UK’s coronavirus recovery, many of which will directly benefit the manufacturing industry, including:

  • A Job Retention Bonus to help wind down the furlough scheme, which will see businesses paid £1,000 for every furloughed employee they bring back to work and who is still employed as of 31 January 2021.
  • A £2bn Kickstart job creation scheme aimed at encouraging 16-24 year olds into work. The government will subsidise the wages of new young employees for six months. Under the scheme, the government will cover the cost of 25 hours work a week at the National Minimum Wage, with companies able to top up this amount if they wish.
  • An £111m investment to triple the number of traineeships, with businesses offered £1,000 for each trainee they take on. The grant will be capped at 10 jobs per firm.
  • Businesses will receive up to £2,000 for every new apprentice under 25 they hire and £1,500 for every new apprentice above 25.
  • An extra £32m in funding for the National Careers Service, which is expected to benefit around a quarter of a million young people.

Green recovery & investment

The Chancellor also said the government wants a “green recovery with concern for our environment at its heart”.

  • Tens of thousands of jobs will be created through bringing forward work on £8.8 billion of new infrastructure, decarbonisation and maintenance projects.
  • This includes a £3bn green investment package to help create around 140,000 green jobs and a £1bn programme to help make public sector buildings greener.

The manufacturing industry was quick to react.

Rowan Crozier, CEO of pressings and stamping specialist Brandauer

“It feels like manufacturing has been forgotten…tax reliefs for innovation, encouragement for consumer spending, industry stimulus packages, where are they?

“On the points the Chancellor made, I think the furlough scheme closing is a good call as it will encourage companies to make decisions and not prolong the uncertainty. The retention bonus is a good idea, but not sure it is a big enough bonus to make employers think twice about letting people go.

“£2k for new apprentices is very welcome and has made our mind up on taking on two more in February next year. This, along with the Kickstart Scheme, is fantastic for young people, but what about older workers? They will be affected as well by the economic instability and, in some cases, probably worse off due to their commitments.

“The green investment doesn’t really hit the spot for manufacturers. We need to drive technology adoption and new innovation, not focus on retrofitting”.

Mike Hawes, SMMT Chief Executive

“Today’s announcements to safeguard jobs and encourage consumer spending in some parts of the economy are welcome – but it’s bitterly disappointing the Chancellor has stopped short of supporting the restart of one of the UK’s most important employers and a driver of growth.

“The automotive sector has been particularly hard hit, with thousands of job losses already announced and many more at risk. Of Europe’s five biggest economies, Britain now stands alone in failing to provide any dedicated support for its automotive industry, a situation that will only deter future investment.

“We urgently need government to expand its strategy and introduce sector-specific measures for UK auto to support cash flow such as business rate holidays, tax cuts, and policies that provide broader support for consumer confidence and boost the big ticket spending that drives manufacturing. Until critical industries such as automotive recover, the UK economic recovery will be stuck in low gear.”

Steve Elliott, CIA Chief Executive

“We support the government’s measures to kick start the economy. As a sector, we place strong emphasis in ensuring young people enter and remain in the workplace through training and apprenticeships. The sector depends on the best scientists and engineers, it’s for this reason we operate a large number of apprenticeships and training programmes so are grateful for the support in this crucial area.

“Our industry has been contributing directly towards the fight against Covid-19 – whether that is repurposing ethanol for hand sanitiser production; supplying key ingredients to ensure effective disinfectants or critical raw materials for medications. The past four months have again demonstrated our criticality to the economy and broader society.

“What we now need is an Autumn spending review and budget that clearly focuses on the UK’s manufacturing rebound with an emphasis on stimulating demand and supporting energy intensive industries as they transition to low carbon. The chemical industry continues to support half a million jobs, many of which are highly skilled and well paid based in some of the most economically challenging parts of the UK. We are the solution to any levelling up challenges and we want to create an investment climate that delivers environmental, social and economic growth throughout the UK”.

Stephen Phipson, Chief Executive of Make UK

“Industry will applaud the Chancellor’s bold intent which will spur the process of  rebuilding business confidence and healing the economy. Manufacturers were already at the forefront of a new digital era and the crisis has shot them forward into a future economy where there will be new jobs which will require new skills. 

“As such, the emphasis on protecting jobs which already exist, whilst safeguarding and preparing young people with the skills for future jobs which may not yet have been invented is a strategy that companies will fully support. In particular the funding for Apprenticeships is especially welcome and will help boost employers’ investment in their future workforce.

“This is not the beginning of the end of this crisis, however, but perhaps the end of the beginning as far as the economy is concerned. Moving forward, just as industry has shown how flexible and innovative it can be at a time of national need, then government will need to be equally flexible and innovative in dealing with the after effects which will undoubtedly require further action at some stage.

“Manufacturers stand ready to work with government to do whatever it takes to boost growth and livelihoods across the whole of the UK.”

John Kitchingman, Managing Director at Dassault Systemes

“The Chancellor’s plan to increase funding for a green deal will enable the UK to capitalise on some of the benefits we have witnessed recently: reduced pollution, increased consumer demand for safer products and services, and decisions by many industries to review their current practices to put sustainability at the heart of their businesses.  

“As we embark on the journey to net zero, we need to ensure that every aspect of our society is sustainable – from the buildings in our cities to the products we design, the materials we source, the road from the factory to the consumer and even the treatments our patients get given.

“One way to do so is by using virtual twins, which enable industries to create digital prototypes of anything from a shoe to a city. This reduces the risk of prototypes ending in landfill and provides the additional benefit of creating various scenarios to make the product, service or infrastructure project sustainable.

“The World Economic Forum announced that 2020 was going to be the year of sustainability. Support from the government will enable all industries to accelerate their move to a greener, safer and healthier future – a fundamental change if we are to align people, planet and profits in post-Covid Britain”.

Thang Vo-Ta, co-founder and CEO of period-product start-up Callaly, and a member of The Manufacturer Top 100

“I was really interested in the kick-start scheme and the additional support for businesses hiring apprentices. Callaly has benefitted from the Job Retention Scheme in recent months, and more broadly R&D tax credits and grants & loans from Innovate UK in the past, so I feel strongly that we should do what we can to stimulate the jobs market and give young people opportunities they wouldn’t have ordinarily had. We are looking at both these schemes seriously and hope to be able to take advantage.

“On that note – in order to create jobs, we need to grow. What I’d like to have seen is a commitment to incentivise investment in high-growth startups like ours. For example, I would have liked to have seen an emergency boost to the Enterprise Investment Scheme (which offers financial incentives to investors) from 30% to 50%.

“Although this might have been controversial politically, it would encourage vital investment into companies like Callaly who are ambitious about growing and hiring”.

Paul Morris, CEO of Addmaster

“As a business that is crucial to the fight against Covid-19 with our antiviral products, I was particularly interested to hear the statement from the chancellor.

“It does feel like a lot of paper shuffling, rather than actual new proposals and more of a popularity parade than making the right choices to bring the UK out of this recession.

“I am therefore very confused why the stamp duty threshold was increased when the housing market is busier than ever – any estate agent will tell you the pent up demand is causing a massive boom….so why give away tax to something that doesn’t need help? Did they simply look at stamp duty payments from March to June, and ‘presume the market had slowed or have they actually talked to estate agents?

“In a time when the government is threatening to increase tax to claw back the support payments, I do question their logic.” 

*Header image courtesy of Depositphotos