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Targeted support urged for struggling sectors after Chancellor makes jobs pledges

Industry commentators have broadly welcomed measures set out by Chancellor of the Exchequer Rishi Sunak to boost jobs as part of efforts to support the UK’s economic recovery efforts. But some have raised concerns that without more targeted support for sectors particularly hard hit by the economic fallout of Covid-19, such as manufacturing, aerospace and automotive, skilled jobs will continue to be lost.

In his summer statement last week, Sunak said: “Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.”

Specific measures include the introduction of a job retention bonus of £1000 for each furloughed employee that businesses still employ as of 31 January 2021. A new £2bn “Kickstart” scheme will also be launched to create new, fully subsidised jobs for young people claiming universal credit and at risk of long term unemployment across the country.

In addition a total of £1.6bn will be invested in scaling up employment support schemes, training and apprenticeships, while work will be brought forward on £8.8bn of new infrastructure, decarbonisation and maintenance projects to help support jobs and economic recovery.

CBI director general Dame Carolyn Fairbairn welcomed the focus on jobs in the summer statement as “an important step forward”. But she added: “With nearly 70% of firms running low on cash, and three in four reporting lack of demand, more immediate direct support for firms, from grants to further business rates relief, is still urgently needed.”

Hard hit sectors including manufacturing and aviation should have been given targeted support, according to the Trades Union Congress general secretary Frances O’Grady, who said: “Struggling businesses will need more than a one-off job retention bonus to survive and save jobs in the long term. The government must do far more to stem the rising tide of redundancies. We can’t afford to lose any more good skilled jobs.”

A forecast published by Make UK and Santander at the end of June indicate that it will take until 2022 for manufacturing to recover to its pre-Covid-19 growth track, and the sector could lose a potential £35.7bn in gross added value this year alone, without accounting for a possible second wave of the pandemic or a no-deal EU exit.

Responding to the chancellor’s announcements, Make UK’s chief executive Stephen Phipson said: “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.

“The emphasis on protecting jobs which already exist, while 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.”

However he added: “Just as industry has shown how flexible and innovative it can be at a time of national need, the government will need to be equally flexible and innovative in dealing with the after-effects which will undoubtedly require further action at some stage”.

The Federation of Small Businesses has also welcomed Rishi Sunak’s focus on jobs but said: “The key now is making sure these positive new measures work for all, especially the small firms that make up 99% of our business community and employ 17 million people.

“The job retention bonus must be easy to access. We can’t have paperwork holding up this vital support. We pushed for incentives to take on apprenticeships and it’s good to see those delivered. The funding and subsidies for apprenticeships, kickstarter roles and traineeships also need to be accessible. Young people are looking for work now.”

Another sector particularly damaged by the impacts of Covid-19 has been the automotive industry. The Society of Motor Manufacturers & Traders described it as “bitterly disappointing” that the Chancellor “stopped short” of directly supporting the restart of the sector.

“The automotive sector has been particularly hard hit, with thousands of job losses already announced and many more at risk,” he said. “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.”