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The UK will fall behind its competitors and risk a loss of key skills if the furlough scheme is not extended for critical sectors, a body representing manufacturers has said.

Almost two-thirds (62%) of manufacturers polled by Make UK agreed or strongly agreed that the Coronavirus Job Retention Scheme should be extended beyond October.

Some 22.8% said furlough should be extended for critical sectors, while 17% said it should be extended for any business. A further quarter said the scheme should be put in place again should there be further lockdowns, while 17.9% said another support programme should be put in place.

Stephen Phipson, Make UK chief executive, said: “The protection of key skills should be a strategic national priority as this will be the first building block in getting the economy up and running. Ensuring that those sectors which are at the forefront of technology and will provide the growth sectors and high skill jobs in recovery should receive the greatest support possible.

“The starting point for this should be an extension of the Job Retention Scheme to those sectors which are not just our most important but who have been hit hardest. Failure to do so will leave us out of step with our major competitors and risk a loss of key skills when we can least afford to do so.”

The Coronavirus Job Retention Scheme is due to close completely on 31 October. However, Morgan Stanley economists Jacob Nell and Bruna Skarica have predicted the government will extend the programme in a “less generous and more targeted” way, following similar decisions taken by other European nations.

Last week the TUC put forward a plan that it claimed would reduce job losses as the furlough scheme came to an end. Its proposals included a new scheme that would require businesses to demonstrate they have been affected by coronavirus restrictions to qualify, and for workers to work a minimum proportion of their normal hours.

Chancellor Rishi Sunak has repeatedly ruled out an extension to the scheme, which has supported more than nine million employees.

According to Make UK’s latest Manufacturing Monitor, for which 226 organisations were surveyed, half of manufacturing firms have seen their orders and sales decrease over the past two weeks. Less than a fifth (17.6%) were operating at full capacity, and only 27% expect to be at full capacity at the start of 2021.

Some 42.4% had already made redundancies due to Covid-19, while 30.2% expected job losses over the next six months.

Make UK’s report says: “The biggest story over the next months will be the closing of the JRS, and its impending impact on unemployment and the UK’s recovery. The Chancellor announced in the mini-budget that firms will receive £1,000 for each furloughed employee kept in employment until the end of January 2021. However, many Make UK members see this as a small incentive and instead many (62.1%) would prefer to see an extension of the JRS for critical subsectors.”

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