Why this firm has chosen to return the £130,000 it received in furlough money

Cable cleat manufacturer Ellis Patents said it viewed handing the money back as a “social obligation”.

The firm, which employs 53 staff, had to place as many as 23 people on furlough at any given time until October - equating to 44 per cent of its workforce.

However, as sales bounced back, the North Yorkshire-based SME ended the year in December with a profit.

Richard Shaw, chairman of Ellis Patents, told The Yorkshire Post: “We got to December and things had recovered. The whole business has been affected by coronavirus.

“We didn’t have a pay increase for our staff, which we would normally have done from August. We didn’t pay any dividends to shareholders during the year.

“We have conserved our cash by only doing capital expenditure that is completely essential. The business has been held back.

“When we got to the end of the year, we did something to help our employees. We gave them an additional Christmas bonus, which was a special Covid-19 bonus for their time and effort that they put in to sustain the business.”

In total the Ellis Patents paid back £130,000 that it had claimed in furlough support.

Mr Shaw said the payments had “artificially inflated” the firm’s profits and that it’s shareholders, of which there are around 20, would have questioned the use of the furlough scheme.

He added: “It’s a case of a social conscious, that we feel that before we pay any money to our shareholders, we ought to pay this back.

“You’ve got to remember that while people say this is the Government’s money, it is not. The Government has borrowed this money. Sooner or later the Government is going to have to repay that debt.”

Mr Shaw said that the business felt it was the “right thing to do” as it is in a position to do its bit.

The business had reassured its employees that they would continue to get paid even before the Government introduced the Job Retention Scheme.

Mr Shaw said: “The primary concern for employees was of course ‘what happens to us?’ At that stage we didn’t know how long it was going to last and we just said we will continue to pay you.”

Once the support was introduced, the Ellis Patents made use of it.

The chairman is grateful for the existence of the furlough scheme despite not needing it in the long run.

“When the Government announced that furlough money was there,” he said, “the only sensible thing to do was to make use of it because at the end of the day a business can only survive as long as its cash or its capacity to borrow is there.”

The difference between the first lockdown and the current one is that many of the manufacturer’s key markets are open.

Mr Shaw said: “One of the things that happened in the last lockdown that hasn’t happened this time is most building sites shut.

“A lot of our goods will be going into construction type projects. That immediately impacted our business. This time around that hasn’t happened.”

Small firms will also be repaying money

While large corporates have hit the headlines for returning furlough money, which they did not require the use of, SMEs are often overlooked, says Richard Shaw.

He hopes that by Ellis Patents making public its repayment, other SMEs will be recognised in a similar way.

Currently, business “under the current circumstances” is “quite good” says the chairman of Ellis Patents.

He added: “We are quite happy with our level of business, both home and overseas.

“The recovery has been across the world so far.”

However, there are still certain parts of its markets that haven’t recovered yet.

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James Mitchinson