Budget must address short-term issues but new mindset needed for longer term growth
- More than a quarter of companies believe normal trading will take a year or longer
- Just a quarter of companies currently at full capacity while only half expect to be at the start of 2022
- More than a third of companies seen sales and orders decrease since the start of the year
- A third of companies still considering redundancies in next six months
- Pay freezes for third of companies where settlements agreed
- Business rates waivers, JRS extension, cuts in employment costs and increase in investment allowances top list of Budget asks
The call by Make UK comes on the back of its latest Manufacturing Monitor tracking survey which shows that companies are preparing for a long-haul recovery from the current pandemic. Make UK believes that while further short-term tactical measures will be needed in the Budget to help support companies through this year, there is an urgent need to develop a longer-term strategic vision that sets out how the UK can prosper.
Welcoming the announcement of a new science research agency to invest in cutting edge blue-sky technologies Make UK believes this can be the starting gun on a new era of technological advance and opportunity.
According to the survey more than a quarter of companies (28.9%) believe it will take a year or longer for normal trading to return while more than a third (36.7%) think it will take between six and twelve months. Furthermore, just a quarter of companies (25.4%) are currently operating at full capacity while just half expect to be by the start of 2022.
The continuing difficult conditions are highlighted by the fact that more than a third of companies have seen sales (35.9%) and orders (36.6%) decrease since the start of the year. A quarter of companies (24.7%) said the current lockdown is better than the previous two, almost two thirds (61.8%) said conditions were the same while 13.4% said conditions now were worse.
The survey also backed Make UK’s call for the furlough scheme to be extended to at least the end of Q3 with less than half (44.3%) of companies saying they had no employees furloughed while more than a third (37.8%) said they still had up to 10% of staff furloughed. While the survey suggests that most redundancies have already taken place, approximately one third of companies (33.7%) are still considering redundancies in the next six months compared to two thirds who say they have no plans to.
When asked what measures Government should take in the Budget, extending the Job Retention Scheme was the second highest choice of companies (47.5%) while Make UK is also calling for additional measures which were backed by the following percentages in the survey:
- Waive Business Rates and reduce the overall cost burden (56.8%)
- A longer-term commitment to increase investment allowances (45.4%)
- Greater fiscal incentives for R&D including doubling the R&D tax credit (35.5%)
In addition, Make UK wants Government to commit to supporting a new Manufacturing Skills Taskforce, reform the Apprenticeship Levy, roll out the Made Smarter initiative across all regions and introduce a net zero support package. Make UK also believes there should be rewards for businesses that reach green targets and support for those sectors where transition will be a challenge.
The survey of 186 companies was taken between 13 and 21 January.