Chancellor’s job scheme offers platform for recovery, says fleet and automotive industry
The chancellor’s ‘Winter Economy Plan’ announced yesterday has been welcomed by many within the fleet and automotive industries, who say it will help the sectors to weather the storm of continued Covid restrictions.
Cancelling the usual autumn Budget in November, Rishi Sunak said it was “not the time” for long-term plans and instead revealed a series of measures to help firms cope with some six months of restrictions.
The chancellor had rejected calls to extend the £35bn furlough scheme and instead revealed a new Job Support Scheme, aimed mainly at SMEs but also large businesses that can prove they have been adversely affected by Covid-19. Effective from 1 November, the new scheme will last six months and will require employees to work a minimum of 33% of their working hours. Employers will pay the hours worked and for the remaining hours the Government and the employer will pay a third each.
The chancellor also revealed a new ‘pay as you grow’ scheme for businesses that took government-guaranteed loans during the crisis, which will now have 10 years instead of six to repay them. The Coronavirus Business Interruption Loans will also be extended for up to 10 years.
In addition, businesses that deferred their VAT will no longer have to pay a lump sum at the end of March 2021, but can instead pay smaller, interest-free payments over the course of 11 months.
Although the hospitality sector was a key focus for the plans, the Job Support Scheme measures have also been greeted by many within the fleet and automotive sector, which still has many companies with furloughed staff. This includes the BVRLA, which said that 37% of BVRLA members expect to have employees still on furlough at the end of October, and added that the additional support would help to stem potential job loss.
Chief executive Gerry Keaney commented: “Our industry is resilient and continues to adapt ways of working to protect lives and livelihoods, but cash is king when it comes to survival and this additional support will provide a lifeline for many organisations that are battling to maintain a sustainable business and protect jobs.”
The SMMT also said the scheme would provide temporary relief for the automotive sector, which has been badly hit by the pandemic, as too will the flexibilities on the loan schemes and tax deferrals.
Chief executive Mike Hawes added: “We must make sure it’s more than just a short-term lifeline, however, and, like schemes elsewhere, ensure it supports jobs for the duration of the pandemic and recovery. We need every manufacturer to hold on to skilled, viable jobs, and government and business must do everything to improve competitiveness and demand. Business remains fragile as we head into a winter of uncertainty, and a 2021 recovery is immensely challenging and far from guaranteed.”
Steve Nash, CEO of the Institute of the Motor Industry (IMI), also said the scheme would be welcomed by businesses in the automotive sector who face the enormous challenge of delivering a quality service whilst managing costs in the face of reduced turnover.
“ONS data for earlier this month showed that around 2% of jobs in the sector have been made permanently redundant with potentially an additional 7,200 planned by the end of this month. And approximately 88,500 jobs remained on furlough earlier this month, 14% of jobs in the sector.
“The chancellor’s new scheme should therefore provide some respite – after all, it’s crucial that individuals and families who don’t want to use public transport during this difficult time, but still need to get out for the school run, shopping and supporting family members can have access to professional services to stay safe on the roads,” he stressed.
And the National Franchised Dealers Association (NFDA) also outlined that the measures would give dealers additional time and greater flexibility for their repayments in times when businesses face a number of external challenges.
Additionally, Logistics UK outlined that the plan would help struggling businesses to avoid an avalanche of redundancies and insolvencies. Chief executive David Well said: “We are pleased the chancellor has listen to our fears and offered a platform for economic growth and recovery. With the UK remaining in crisis mode as coronavirus cases rise, ongoing, flexible financial support for businesses will be essential until the economy recovers.”