The Covid-19 pandemic is an economic crisis as well as a public health crisis. Businesses across our sectors have faced significant strains and in the aerospace industry some companies face an existential crisis. The Government has stepped in with an active programme of business support measures, but tailored and durable support will be required for sectors where recovery will take longer than the norm. Without this there is a real risk that the UK could lose sizeable chunks of its world-class national industrial capabilities.
The road to recovery for our sectors will be arduous and businesses are planning for depressed demand and output well into 2021 and beyond. For that reason, additional measures are needed to reduce cost pressures. The current business support measures must evolve so that our sectors can strengthen their cashflow, inject liquidity, and ultimately continue to support their employees.
Job Retention Scheme
The Government’s recent extension to the Job Retention Scheme (JRS) was welcomed by industry and the new flexibility for part-time working will help many workforces to adapt to changing circumstances. However, more is needed to increase the scheme’s flexibility, as civil aerospace will be one of the last sectors to fully return to work. We believe that the minimum period of furlough must be reduced to less than one week, as this would enable companies who may not have enough work initially to then fill a full week. If they could move employees on and off the scheme in an agile way this would provide firms with some certainty around their required workforce, thus saving jobs and protecting domestic engineering capability.
Cashflow troubles are exerting tremendous pressures on many of our members. The Government has already acted to ease this burden, but the more that can be done to free up cash the easier it will be for employers to protect jobs. We therefore suggest that the JRS should also be extended to cover the National Insurance and pension contributions of employees at businesses in financial distress, not only those who are furloughed.
Corporation Tax Deferments and Loan Schemes
Corporation tax deferments should be made more widely available and the option of business rates holidays should be extended to manufacturers. This would help alleviate their cash burden and thereby avoid site closures and job losses. More broadly, continued access to finance and liquidity will be essential to ensure that vulnerable companies do not fall through the gaps. Support measures such as the Coronavirus Business Interruption Loan Scheme and the Bounce Back Loan Scheme should therefore remain available for companies to access for an extended period.
An evolution of the current schemes will ensure that our sectors can retain skills and national industrial capability in the face of a lengthy recovery period. Our companies recognise the role they have to play in this national effort and effective business support during this time will ensure they can continue to play their part in future, supporting the UK’s national security, resilience and prosperity.
To read about our five priorities for Restart & Recovery, click here.