Monday 7 September 2020 1:58 pm

Manufacturers warn of ‘second wave’ of job cuts without furlough extension

A leading manufacturers’ organisation has issued a rallying cry urging the government to extend the furlough scheme beyond October, warning a failure to do so risks leaving the UK “in the slow lane behind major competitors”.

Make UK issued its appeal after more than 62 per cent of companies backed an extension to the scheme, according to its latest Manufacturing Monitor tracking survey.

The Coronavirus Job Retention Scheme has been running since March with the government paying 80 per cent of employees’ wages up to £2,500 a month.

This month, the scheme was reduced to cover to 70 per cent of wages and is currently due to end on 31 October.

But Make UK warned that ending the scheme could trigger another surge of mass redundancies.

More than a third of the companies in the survey revealed they intend to make job cuts within the next six months.

The aerospace and automotive sectors, which are already on a cliff edge, would be significantly harmed from a further raft of unemployment.

Data from Make UK showed that these two industries are the largest investors in research and development, contributing £5.9bn to the UK economy.

Stephen Phipson, chief executive of Make UK, said: “The protection of key skills should be a strategic national priority as this will be the first building block in getting the economy up and running. Ensuring that those sectors which are at the forefront of technology and will provide the growth sectors and high skill jobs in recovery should receive the greatest support possible.

“The starting point for this should be an extension of the Job Retention Scheme to those sectors which are not just our most important but who have been hit hardest. Failure to do so will leave us out of step with our major competitors and risk a loss of key skills when we can least afford to do so.”

Alongside the aerospace and automotive industries, the coronavirus pandemic has put significant strain on the arts and leisure sectors.

The latest figures show that more than 50 per cent of these workers remain dependent on furlough, compared to only 13 per cent of workers across all industries.

MPs have voiced their concerns to chancellor Rishi Sunak, with the DCMS committee also joining Make UK in urging an extension to the furlough scheme into next year.

Julian Knight, the DCMS committee chair, said: “We should not allow the arts and leisure sectors that contribute amazing value to our economy to become ‘hostages to fortune’ as a result of failure to act now before it’s too late.”

Extending the scheme into 2021 would put the UK in line with some of its European counterparts, with Germany and France already pledging to do so.