Dear All,
Detailed below is the Weekly News and Covid Update for 21st September.
Have a good week.
Gordon Polson – Chief Executive
Federation of Bakers Ltd
FOB Chief Executive’s Weekly News for 21st September 2020
Bank of England Agents’ Summary of Business Conditions
Overview
This publication summarises intelligence gathered by the Bank’s Agents between early August and early September.
The Agents’ scores published alongside this document are based on information gathered between mid-July and late August. During the early stages of the pandemic, economic activity fell at an unprecedented pace, reflected in some Agents’ scores moving to the extremes of their range, where scores can be consistent with a wide range of outcomes. Although activity has recovered in recent months, it is still markedly weaker than a year ago, so a number of the Agents’ scores have remained very low.
A summary of information gathered by the Bank’s Decision Maker Panel is also published alongside this document.
Consumer demand
Retail sales strengthened during August; services demand remained weak.
Sales of consumer goods over the past month or so recovered from their lows during lockdown: contacts reported faster growth in online sales, while store-based sales also improved, though to a lesser extent. Many retail contacts said they delayed opening less profitable stores, and some chains closed stores permanently. Contacts noted that sales at out-of-town shopping centres were stronger than in town centre stores.
Demand varied for different types of goods. Contacts reported strong demand for household goods, furniture and garden-related items, possibly reflecting an accumulation of savings and people spending more time at home. By contrast, sales of clothing and footwear were still markedly weaker than a year ago, though sales were boosted after stores reopened in June.
Contacts reported strong growth in sales of used cars compared with a year ago, though demand for new cars was more muted. Contacts were cautious about how long demand would be sustained.
Supermarkets said sales growth had eased somewhat from its peak during lockdown, as some consumers returned to eating out. However, online orders for home delivery and in-store collection remained strong. Convenience stores also continued to report strong sales growth.
Consumer services turnover remained significantly lower than a year ago. This reflected the widespread cancellation of hospitality bookings, weak demand for air and rail travel, indoor leisure and sports, and the fact that many entertainment venues remained closed.
However, restaurant contacts reported strong demand, supported by the Government’s Eat Out to Help Out scheme, and many reported positive trade on days when the scheme did not apply. Nonetheless, revenues were constrained because restaurants had to limit customer numbers in order to maintain social distancing — in some cases by as much as half. And some restaurant chains kept certain outlets closed, especially in locations reliant on business from office workers.
Some outdoor attractions, such as theme parks, reported strong domestic visitor numbers, boosted by a ‘staycation’ effect, though attractions that rely on overseas tourists fared less well. Revenues were also constrained by the need to limit visitor numbers.
Manufacturing
Manufacturers have largely resumed production, but activity is still weak in some sectors.
The majority of manufacturing contacts said they had restarted output, though many were operating below capacity in order to maintain social distancing, and demand remained subdued.
Contacts in the aviation sector said output continued to be well below normal levels, reflecting the drop in demand for commercial flights and less maintenance for existing fleet. In addition, uncertainty about the outlook for commercial air travel had depressed new orders for aircraft.
Automotive manufacturing picked up, especially for electric vehicles — but was still significantly below normal. This had a knock-on effect on other companies in the supply chain, such as steel producers, who reported that demand from the automotive sector remained very weak. Contacts supplying the oil and gas sector also reported a reduction in orders.
By contrast, manufacturers of construction goods, such as doors, windows and paving, said that demand had recovered and demand for DIY products remained a little above normal. And output in the rail sector was supported by large public sector projects.
Suppliers to the food service sector reported a modest recovery in demand as restaurants reopened, but contacts said they were not expecting order levels to return to normal until next year.
Demand for some chemicals, healthcare and personal protective equipment remained strong, though sales of some pharmaceuticals had been depressed by prioritisation of Covid-19 treatments.
A growing number of manufacturing contacts that trade with the European Union expressed concern about the arrangements for the end of the transition period. A few companies said they were seeking to onshore supply chains to limit disruption.
Commercial property
Investor appetite for commercial real estate remained subdued. There were some reports of interest from overseas investors, but very few reports of distressed sales.
In the retail sector, rental income was significantly lower than normal. Some landlords have been renegotiating rental terms, and the shift towards rents linked to turnover continued, reflecting uncertainty over future rental growth in the sector due to structural change.
Rental returns in the office market were reported to be just a little below normal. However, there was significant uncertainty over the outlook for demand, as some businesses were actively considering giving employees the option to work remotely on a permanent basis.
By contrast, demand for industrial space remained strong, particularly for distribution and logistics premises, supported by the shift towards online retail. Demand for healthcare premises and data centres was also robust.
Employment and pay
Companies continue to adjust staffing levels; pay growth is likely to be subdued in 2021.
Given the uncertain outlook, many companies reported freezing pay, and a large proportion of contacts said they planned to delay or cancel pay settlements this year. Companies in a number of sectors reported introducing temporary pay cuts, though these were mainly at management level.
Contacts said they had brought most furloughed workers back to work. Nonetheless, some companies across all sectors reported plans to reduce headcount, particularly in the second half of this year as the CJRS unwinds. Job losses were expected to be particularly severe in the hospitality, retail, aviation, automotive and oil and gas sectors. Some companies planned to see how demand evolves in the coming months before making headcount decisions.
There were some reports of headcount being increased in sectors where demand has been stronger than normal, however, such as food processing and retail; IT and digital services; medical and scientific development, and some financial services.
Costs and prices
Contacts reported little movement in prices, as uncertainty about demand and constrained capacity limited the desire to move prices up or down.
Manufacturing contacts reported barely any input price inflation and little scope to increase prices due to competition. Business services contacts also saw little scope to increase fees. In fact, there was likely to be downward pressure on prices in some sectors as clients focused on cost-cutting.
Contacts in hospitality, leisure and tourism said that a combination of ‘staycation’ demand, the government’s Eat Out to Help Out scheme, and constrained capacity due to social distancing measures meant that they planned to hold prices steady. Many contacts had not passed on the cut in VAT, in order to offset higher operating costs associated with Covid-19 safety measures, or to help them cover revenues lost during lockdown.
Some contacts thought that offering discounts was unlikely to boost demand among consumers concerned about Covid-19 transmission. By contrast, some hotels and venues in city centres, whose revenues rely on events and international travellers, have been discounting to attract domestic tourists. They were concerned about further downward pressure on prices over the winter season.
In the retail sector, contacts reported offering fewer discounts to clear summer stock, and said that their stock for the autumn/winter season was more aligned with current demand.
However, in the supermarket sector competition meant that some discounting was starting to re-emerge. And while there were some cost pressures building from higher transport costs and Covid-19 safety measures, supermarkets did not expect to be able to fully pass these on to prices.
New car prices were reported to be flat, but used-car prices were boosted by strong demand and limited supply.
The latest news from the Department for Environment, Food & Rural Affairs
Stronger measures introduced in parts of the north east to tackle rising infection rates
Today (18 September) new restrictions have been introduced in parts of the north-east of England to curb rising infection rates. Please see the press release here. Guidance can be found here.
Restrictions for more areas in north west, West Yorkshire and midlands to tackle rising infection rates
Lancashire, Merseyside, Warrington and Halton have been escalated to areas of intervention, with new restrictions in Wolverhampton, Oadby and Wigston, and parts of Bradford, Kirklees and Calderdale.
Venues required to enforce rule of 6, NHS QR code posters and contact logs
Hospitality venues in England are, from today, legally required to enforce the rule of 6 and maintain social distancing between customers, or face a fine of up to £4,000.
Oral statement on coronavirus and the government’s plans for winter
On 17 September the Secretary of State for Health and Social Care made a statement on coronavirus and the government’s plans to put us in the strongest possible position for this winter.
Official figures show that the furlough scheme has worked
More than half of those furloughed since May returned to work by mid-August according to data published by the Office for National Statistics.
HMRC Update:
We’re writing to let you know about upcoming changes to the Coronavirus Job Retention Scheme (CJRS) and what this means for you.
From 1 October, HMRC will pay 60% of usual wages up to a cap of £1,875 per month for the hours furloughed employees do not work.
What you need to do from 1 October
Continue to pay your furloughed employees at least 80% of their usual wages for the hours they do not work, up to a cap of £2,500 per month. You will need to fund the difference between this and the CJRS grant yourself.
The caps are proportional to the hours not worked. For example, if your employee is furloughed for half their usual hours in October, you are entitled to claim 60% of their usual wages for the hours they do not work, up to £937.50 (half of £1,875 cap). You must still pay your employee at least 80% of their usual wages for the hours they don’t work, so for someone only working half their usual hours you’d need to pay them up to £1,250 (half of £2,500 cap), funding the remaining portion yourself. For help with calculations, search ‘Calculate how much you can claim using the Coronavirus Job Retention Scheme’ on GOV.UK.
You’ll also continue to pay your furloughed employees’ National Insurance and pension contributions from your own funds.
Make sure your data is right
It’s important that you provide all the data we need to process your claim. Payment of your grant may be at risk or delayed if you submit a claim that is incomplete or incorrect and we want to help you get this right. We’ll get in touch if we see any employee data missing from your previous claims.
Claiming for 100 or more employees – use our new template
The easiest way to provide us with the data we need is to use our updated template – to find it, search ‘download a template if you’re claiming for 100 or more employees through the Coronavirus Job Retention Scheme’ on GOV.UK.
To help prevent mistakes, the XLS and XLMS versions of the template now highlight any missing information you need to include in your claim before you submit it. Where information is missing, fields will be red and once the missing information is filled in, the data fields will turn green. You can also now flag if an employee has recently returned from statutory leave, to ensure claims with any new employees are processed correctly.
Claimed too much in error?
It’s important that you continue to check each claim is accurate before submitting it, and we would also recommend checking previous claims to avoid any penalties for claiming too much.
If you have claimed too much CJRS grant and have not repaid it, you must notify us and repay the money by the latest of whichever date applies below:
- 90 days from receiving the CJRS money you’re not entitled to
- 90 days from the point circumstances changed so that you were no longer entitled to keep the CJRS grant
- 20 October 2020, if on or before 22 July you received CJRS money you’re not entitled to, or if your circumstances changed.
If you do not do this, you may have to pay interest and a penalty as well as repaying the excess CJRS grant. For more information on interest, search ‘Interest rates for late and early payments’ on GOV.UK.
How to let us know if you have claimed too much
You can let us know as part of your next online claim without needing to call us – the system will prompt you to add details if you have received too much. If you claimed too much and do not plan to submit further claims, you can let us know and find out how to make a repayment online. Go to ‘Pay Coronavirus Job Retention Scheme grants back’ on GOV.UK.
We are supporting our customers while tackling serious fraud and criminal attacks. We understand mistakes happen, particularly in these challenging times, and will not seek out innocent errors and small mistakes for compliance action.
Further support
Guidance and live webinars offering you more support on changes to the scheme and how they impact you are available to book online – go to GOV.UK and search ‘help and support if your business is affected by coronavirus’.
Our phone lines and webchat are still very busy, so the quickest way to find the support you may need is on GOV.UK. This will leave our phone lines and webchat service open for those who need them most.
Protect yourself from scams
Stay vigilant about scams, which may mimic government messages as a way of appearing authentic and unthreatening. Search ‘scams’ on GOV.UK for information on how to recognise genuine HMRC contact. You can also forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599.
Agriculture Bill update
Peers debated the Agriculture Bill at Report Stage on 15 September when all the amendments tabled were either withdrawn, not moved or defeated with the exception of 2 amendments concerning financial assistance: Amendment 31 (agreed on division) and the Government’s Amendment 35 (agreed without division). The Report Stage debate is continuing this afternoon (17 September). The Bill’s progress can be followed on its website.
Calorie labelling on alcohol consultation later this year
While responding to a question from Alex Norris on links between obesity and non-alcoholic fatty liver disease, the Public Health Minister, Jo Churchill, said that an impact assessment will be published alongside a consultation on proposals to require companies to provide calorie labelling on alcohol later this year.
Food labelling after the end of the Brexit transition period
Hilary Benn has questioned the Government on what changes will be required to food packaging labelling from 1 January 2021 for items exported to the EU and shipped from Great Britain to Northern Ireland. In response the Defra Minister, Victoria Prentis, said that there will be a period of adjustment for labelling changes required at the end of the transition period and, during this period, the changes that UK businesses need to make when selling between different markets will be minimised. The Government is working to determine the appropriate time industry needs to make changes and will provide guidance as soon as we can do so to ensure that businesses have clarity and certainty.
COVID-19 Autumn/Winter 2020 Guidance for Food, Horticulture and Agriculture website launch
Today, we are pleased to launch www.foodfarmhelp.com – a website specifically designed to provide the latest practical tips, guidance, tools and case studies to help businesses in the food, agriculture and horticulture industries to better manage risks associated with the COVID-19 pandemic during the autumn and winter period.
The site offers a wide range of good practice, tools and case studies that will be updated every two weeks until the end of 2020. All the information is free to share and download.
Please note the information on the site does not replace government, legal or expert guidance.
You can take part by:
- Accessing the available good practice, tools and case studies in the Guidance section of at www.foodfarmhelp.com
- Sign Up to receive fortnightly updates on good practice, tools and case studies. This information will also enable us to capture the reach and impact of the site
- Help us to ensure the website stays up to date and relevant by contacting us via the website to share feedback, tools and resources – Contact Us
- Listen back to two webinars for food manufacturers and growers and farmers and packhouses with expert speakers from retailers, suppliers, unions and Public Health bodies via the links on the website – these can be found in the Guidance section.
This work has been overseen and managed by FNET (Food Network for Ethical Trade), on behalf of its members, with the Association of Labour Providers (ALP), ESC International and nGaje. Whilst this guidance has been developed with a UK focus, we hope that the materials can be used as a baseline for best practice across other countries where support and help may not be freely available.
This work has been supported by a group of collaborators and a group of stakeholders across the food, industry, agriculture and horticulture industries have been consulted for their input and advice. Thank you to all the project collaborators: Aldi, ALP (Association of Labour Providers), Bakkavor, Dunbia, Co-op, ESC International, FNET (Food Network for Ethical Trade), Fresca, Greencore, Herring Consultancy Limited, JZ Flowers, Lidl, M&S, Morrisons, New England Seafood International, nGaje, Ocado, PHE (Public Health England), PHS (Public Health Scotland), PHW (Public Health Wales), Sainsbury’s, Samworth Brothers, Tesco, Total World Fresh, Tulip/ Pilgrims, Waitrose and Partners.
Please do get in touch via the Contact Us link if you have any best practice to share via the site or any feedback on any of the materials.
HSE Update on Calla and Visits
I have been asked twice in recent times for confirmation of legitimacy in respect of unannounced phone calls to businesses, made by HSE representatives, with callers wanting the business to answer questions in respect of their COVID control measures. I was able to confirm that these were indeed legitimate calls and part of HSE’s COVID spot check inspection process. I understand that HSE is going to publicise this inspection process, but in the meantime I thought it may be beneficial to confirm:
- Current HSE COVID spot check inspections are a three stage process, with stages one and two being phone calls.
- The stage one phone call will be made by an employee of CIVICA, HSE’s contracted representatives. During this stage one phone call, if a business wants clarification that it is HSE calling:
- They will be given the HSE CAT (Complaints and Advice Team) phone line number (0300 003 1747), in order for the business to check the legitimacy of the call.
- A time will be arranged with the business for the CIVICA representative to call back, and continue with the stage one process.
- If the business fails stage one, in terms of giving unsatisfactory answers to the questions in respect of COVID controls at the business premises, then the business will be called again by an HSE employee (i.e. stage two), who will be able to question controls more thoroughly. If a business wants clarification that it is HSE calling, at this stage two, email exchanges will be possible.
- Failure to satisfactorily answer questions during stage two, will result in a visit by an HSE inspector (i.e. stage three).
- Businesses are advised, during the stages one and two phone calls, that a failure to engage with the phone call process, will result in a visit by an HSE inspector.
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