Chief Executive’s Weekly News for 8th June 2020

Dear All,

The Weekly News and Covid 19 Update for 8th June is detailed below.

Have a good week and take care.

Gordon Polson

Chief Executive – Federation of Bakers Ltd

Barclays economic update:

UK consumer confidence lowest in over a decade

According to data published by Growth for Knowledge (GFK), consumer confidence in the UK declined to its lowest level in more than a decade at the end of May’20, even as the country’s coronavirus lockdown began to ease.

The index slipped to -36 in the second half of May’20 from -34 in the first half, its lowest since jan’09.

The survey was completed by 2,000 individuals between 20th and 26th may’20, as the government continued to ease the country out of the lockdown that was put in place to control the spread of covid-19.

Joe Staton, client strategy director at GFK, stated that with no sign of a rapid V-shaped bounce-back on the cards, consumers remain pessimistic about the state of their finances and the wider economic picture for 2021. He also added as the lockdown eases, it will be interesting to see how the consumer appetite for spending returns in a world of socially distanced shopping and the seismic shift to online retailing.

Euro area manufacturing pmi may 2020

According to HIS Markit, eurozone manufacturing pmi stood at 39.4 in May’20, higher than the all-time low of 33.4 in apr’20. Still, the latest reading pointed to a sudden reduction in the bloc’s manufacturing sector as government restrictions designed to contain the coronavirus pandemic continued to severely hamper the sector. Both production and new orders declined at slower rates, with export sales declining at the second-sharpest pace in 23 years of data collection. Manufacturers continued to reduce their staffing levels and cut back on their purchasing, while average lead times declined.

On the price front, input costs dropped the most since mar’16 amid lower prices for oil-related items, while output charges declined for an eleventh successive month. Finally, confidence about 2020 improved to a three-month high in May’20 but remained inside negative territory.

CBI Covid Update: On the government’s 14-day quarantine policy, businesses require clarity on how the policy will be reviewed at the end of the month, including a more detailed understanding of who will lead the process, and what criteria will be used to inform official’s judgement.

Businesses have been asking the CBI for clarity on:

  1. Details of the criteria that will be used to review the policy after three weeks, as well as who will be leading this, and how they will be engaging with business?
  2. What does the government’s plan to create “international travel corridors” with our key trading partners look like? What are the underlying criteria for these decisions and when/ how will these be assessed?
  3. What work the government will do to investigate the need for further services industry travellers to be added to the quarantine exemptions list?
  4. How the government is planning on ensuring that UK carriers, airports, ports, and rail ports comply with internationally agreed safety standards for traveller screening?

The CBI will take these concerns directly to officials at the Treasury, BEIS, and the Department for International Trade, to ensure that the review, conducted at the end of the month, is guided by the evidence.

On the government’s Test and Trace programme, many businesses are working to incorporate this into their restart plans. We have seen the system go live in England, Scotland and Northern Ireland, and Wales will launch their version today. We received business feedback over the last week, and three key issues emerged:

  1. The potential impact of test and trace on business operations. For example, what criteria will be used to assess the extent of an individual’s contact with someone who has the virus? Similarly, what mitigating impact of other Covid-secure measures in the workplace are being considered? And can co-workers secure tests even if they do not display symptoms?
  2. Pay and self-isolation. Discussion has emerged on whether SSP is the best support mechanism for affected employees and employers. We know that people told to isolate are entitled to SSP. But, currently, only SMEs can reclaim SSP costs from the Treasury, which can take up to 14 days per person. The CBI are pushing for more government support in this area, for those on low pay and other workers.
  3. Managing the practicalities. This includes technical questions on the implications for data sharing, employer responsibilities when returning to work, and/or managing asymptomatic employees. Greater clarity on these issues would help ensure that production lines can stay open and reduce concern. The CBI are working with the NHS’s Test and Trace team, DWP, the Treasury, and the Data Regulator to share businesses concerns and suggestions. Please keep sending us your feedback.

Last week also saw the government announce that wearing face masks on public transport will be compulsory in England from 15 June, and not wearing one could “ultimately” lead to a fine. The CBI are seeking urgent clarity on what, if any, responsibilities employers have in this area.

On the Job Retention Scheme, we know that flexible furloughs will now be available from July. But the scheme will also be closed to new entrants from Wednesday 10 June. We are still waiting for the full guidance, expected on Friday, to explain how flexibility will work, and what ‘closed to new entrants’ means, but what we do know so far is that:

  • Businesses will have complete flexibility to pick the hours their employees work, paying wages for those hours, with a smaller grant covering the non-worked hours.
  • The minimum length of a furlough will be reduced to one week.
  • Only people that have completed a three-week furlough before 30 June 30 are eligible for any form of furlough from July onwards. That means that Wednesday 10 June is the last day that an individual can be furloughed for the first time.

As we look ahead to this week, the CBI will continue to press the government for clarity on the key operational issues dominating the minds of businesses as they gear-up their restart plans. This will involve putting your concerns to the government on Track and Trace, the international quarantine policy (which comes into effect today), and continuing to monitor progress on the government’s access to finance support schemes.

Finally, the CBI will also be finalising our initial thinking on the policies required to support the economy recovery. We’ve had numerous conversations on this topic over recent days, including roundtables with BEIS and the Treasury to discuss the policies that need to be prioritised on skills, the green economy, and competitiveness. These initial recommendations are now being finalised and we’ll be sending them to government in the coming days.

These ideas are just the start of the CBI’s engagement with government on the important task ahead. It is vital we use this crisis to build back better. Our thinking and ideas around this issue are evolving all the time, so please continue to feed in your thoughts and priorities, either via the CBI’s coronavirus mailbox, or, for our members, through your account manager.

HMRC Update: As part of changes to the Coronavirus Job Retention Scheme (CJRS), I’ve outlined below important dates that may impact you in the coming weeks.

Important dates – what you need to know now

  • The scheme will close to anyone who hasn’t been furloughed for 3 weeks by 30 June, so you will only be able to claim for employees after that if they have been furloughed for a full three-week period at any time before the end of June.
  • So, if you intend to furlough an employee who hasn’t been furloughed before, you will need to agree that with them and start their period of furlough on or before 10 J‌un‌e – this is the last day on which someone who has never been furloughed before can start a period of furlough and qualify for the scheme – this ensures the minimum three-week period is complete by 30 J‌un‌e.
  • You will then have until 31 J‌ul‌y to make a claim for any periods of furlough up until 30 J‌un‌e – this applies to both employees furloughed for the first time and those you have previously furloughed and claimed for.

The future of the scheme

  • The rules of the scheme are changing from 1 J‌ul‌y.
  • On 12 J‌un‌e, we’ll publish full guidance on all the scheme changes on GOV.UK – search for ‘Coronavirus Job Retention Scheme’ to find this – webinars offering more support on the changes will also be available to book online from 12 June – please do not call us for more information, as everything you need to know about the scheme changes will be published online on GOV‌.UK.
  • From 1 July, you’ll have the flexibility to bring previously furloughed employees back to work part time, you can decide the hours and shift patterns they work to suit the needs of your business – you’ll pay their wages for the time they’re in work and can apply for a scheme grant to cover any of their normal hours they are still furloughed for.
  • Also, for periods starting on or after the 1 J‌ul‌y, the maximum number of employees you can claim for in any period cannot be higher than the maximum number you have claimed for in a previous period. For example, if your highest single claim for periods up to 30 J‌un‌e was for 100 people, you can’t claim for more than this number in later periods.
  • From 1 Au‌gu‌st, you will need to contribute towards the wage costs of your furloughed employees until the scheme ends on 31 Oc‌to‌be‌r.

Making changes to your claims if you have over-claimed

If you’ve made an error in a CJRS claim that means you received too much money, you must pay this back to HMRC.

We’ve updated the application system so you can tell us if you have over-claimed in a previous claim – when you apply you’ll be asked if you need to reduce the amount to take account of a previous error. Your new claim amount will be reduced to reflect this. You should then keep a record of this adjustment for six years.

If you have made an error in a CJRS claim and do not plan to submit further claims, we are working on a process that will allow you to let us know about your error and pay back any amounts that you have over-claimed. We will update guidance and keep you informed when this is available.

Trade Credit Insurance
Ministers have today announced that Trade Credit Insurance schemes will receive up to £10 billion of government guarantees. The Trade Credit Reinsurance scheme, which has been agreed following extensive discussions with the insurance sector, will see the vast majority of Trade Credit Insurance coverage maintained across the UK. The scheme is available on a temporary basis for nine months, backdated to 1 April 2020, and running until 31 December 2020, with the potential for extension if required. The press release can be found below.

FOB BNF report HCP announcement with linkThe British Nutrition Foundation bread review supported by FoB has now been published. We are pleased to share the link to the BNF review “The role of bread in the UK diet: An update”, which has just been published – – FoB has issued HCP, consumer and trade releases. The HCP release is attached. PDFs of the review have been sent to FOB’s members. There will also be significant posting on social media.