Crowe commentary on measures to support manufacturing

Commentary by Johnathan Dudley, Managing Partner of national audit, tax, advisory and risk firm Crowe in the Midlands and South West (Cheltenham) and National Head of Manufacturing.

 The latest announcements from the Chancellor on 20 March 2020 will provide welcome relief to the UK manufacturing industry. At the start of the week, the government encouraged people to work from home, which is fine for a good proportion of the service and professional sectors but no use to manufacturers. Likewise, the support announced for rates relief didn’t touch the vast majority of the sector either. All week, much lobbying has taken place as Original Equipment Manufacturers announced plant closures rendering the economic viability of their supply chains at serious risk with ‘talk’ abounding of literally thousands of immediate redundancies and companies starting insolvency processes.

 The introduction of the Coronavirus Job Retention Scheme (CJRS) is a welcome relief for the sector with the government paying the lower of 80% of salaries and £2,500 pcm per individual, without limit. Initially, this is for three months backdated to 1 March with the option to extend this, should the crisis currently in place, continue. The support, forming a grant from HMRC, is aimed to be on stream by the end of April, presumably looking for companies to seek cash flow support in the meantime either from their bankers, by use of the Time To Pay scheme and/or the CBIL scheme, now confirmed to be in place by Monday 23 March and with an extended interest free period, of up to a year.

In addition, the Chancellor has announced a complete deferral of the next quarter’s VAT payment automatically; relieving pressure on the already choked Coronavirus Time To Pay helpline and further extending credit to businesses running across the whole of the next financial year.

There is a clear aim here for the government to plug the hole in the economy caused by the need to fight COVID-19 and maintain our manufacturing capability and capacity. In that respect it has to be a very welcome relief.