Britain’s largest car manufacturer, Jaguar Land Rover (JLR), faces a prolonged shutdown of its global operations after the company announced an extension of the current closure, which began on 31 August, to at least 1 October.

The extension will cost JLR tens of millions of pounds a day in lost revenue, raise major concerns about companies and jobs in the supply chain, and raise further questions about the vulnerability of UK industry to cyber assaults.

A spokesperson said of the move: “We have made this decision to give clarity for the coming week as we build the timeline for the phased restart of our operations and continue our investigation.

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“Our teams continue to work around the clock alongside cybersecurity specialists, the NCSC and law enforcement to ensure we restart in a safe and secure manner.

“Our focus remains on supporting our customers, suppliers, colleagues, and our retailers who remain open. We fully recognise this is a difficult time for all connected with JLR and we thank everyone for their continued support and patience.”

More than 33,000 people work directly for JLR in the UK, many of them employed on assembly lines in the West Midlands, the largest of which is in Solihull, and a plant at Halewood on Merseyside.

An estimated 200,000 more are employed by several hundred companies in the supply chain, who face a prolonged interruption to trade with what for many will be their largest client.

The “just-in-time” nature of automotive production means that many had little choice but to shut down immediately after JLR announced its closure, and no incentive to resume until it is clear when it will be back in production.

Industry sources estimate that around 25% of suppliers have already taken steps to pause production and lay off workers, many of them by “banking hours” they will have to work in future.

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Another quarter are expected to make decisions this week, following JLR’s previous announcement that production would be paused until at least Wednesday.

JLR, which produces the Jaguar, Range Rover and Land Rover marques, has also been forced to halt production and assembly at facilities in China, Slovakia, India and Brazil after its IT systems were effectively disabled by the cyber attack.

JLR’s Solihull plant has been running short shifts with skeleton staff, with some teams understood to be carrying out basic maintenance while the production lines stand idle, including painting floors.

Among workers who had finished a half-shift last Friday, there was resignation to the uncertainty. “We have been told not to talk about it, and even if we could, we don’t know what’s happening,” said one.

Calls for support

The government has faced calls from unions to introduce a furlough-style scheme to protect jobs in the supply chain, but with JLR generating profits of £2.2bn last year, the company will face pressure to support its suppliers.

Industry body the Society of Motor Manufacturers and Traders said while government support should be the last resort, it should not be off the table.

“Whatever happens to JLR will reverberate through the supply chain,” chief executive Mike Hawes told Sky News.

“There are a huge number of suppliers in the UK, a mixture of large multinationals, but also a lot of small and medium-sized enterprises, and those are the ones who are most at risk. Some of them, maybe up to a quarter, have already had to lay off people. There’ll be another further 20-25% considering that in the next few days and weeks.

“It’s a very high bar for the government to intervene, but without the supply chain, you don’t have the major manufacturers and you don’t have an industry.”

What happened to the IT system?

JLR, owned by Indian conglomerate Tata, has provided no detail of the nature of the attack, but it is presumed to be a ransomware assault similar to that which debilitated Marks and Spencer and the Co-Op earlier this year.

As well as interrupting vehicle production, dealers have been unable to register vehicles or order spare parts, and even diagnostic software for analysing individual vehicles has been affected.

Last week, it said it was conducting a “forensic” investigation and considering how to stage the “controlled restart” of global production.

Speculation has centred on the vulnerability of IT support desks to surreptitious activity from hackers posing as employees to access passwords, as well as ‘phishing’ or other digital means of accessing systems.

In September 2023, JLR outsourced its IT and digital services to Tata Consultancy Services (TCS), also a Tata-owned company, intended, it said, to “transform, simplify, and help manage its digital estate, and build a new future-ready, strategic technology architecture”.

Resilience risks

Three months earlier, TCS extended an existing agreement with M&S, saying it would “improve resilience and pace of innovation, and drive sustainable growth.”

Officials from the National Cyber Security Centre are thought to be assisting JLR with their investigations, while officials and ministers from the Department for Business and International Trade have been kept informed of the situation.

Liam Byrne, a Birmingham MP and chair of the Business and Trade Select Committee, said the JLR closure raises concerns about the resilience of UK business.

“British business is now much more vulnerable for two reasons. One, many of these cyber threats have got bad states behind them. Russia, North Korea, Iran. These are serious players.

“Second, the attack surface that business is exposed to is now much bigger, because their digital operations are much bigger. They’ll be global organisations. They might have their IT outsourced in another country. So the vulnerability is now much greater than in the past.”

Rachel Reeves has been urged by a think tank to cut national insurance and increase income tax to create a “level playing field” and protect workers’ pay.

The Resolution Foundation said the chancellor should send a “decisive signal” that she will make “tough decisions” on tax.

Ms Reeves is expected to outline significant tax rises in the upcoming budget in November.

The Resolution Foundation has suggested these changes should include a 2p cut to national insurance as well as a 2p rise in income tax, which Adam Corlett, its principal economist, said “should form part of wider efforts to level the playing field on tax”.

The think tank, which used to be headed by Torsten Bell, a Labour MP who is now a key aide to Ms Reeves and a pensions minister, said the move would help to address “unfairness” in the tax system.

As more people pay income tax than national insurance, including pensioners and landlords, the think tank estimates the switch would go some way in raising the £20bn in tax it thinks would be needed by 2029/2030 to offset increased borrowing costs, flat growth and new spending commitments. Other estimates go as high as £51bn.

‘Significant tax rises needed’

Another proposal by the think tank would see a gradual lowering of the threshold at which businesses pay VAT from £90,000 to £30,000, as this would help “promote fair competition” and raise £2bn by the end of the decade.

The Resolution Foundation also recommends increasing the tax on dividends, addressing a “worrying” growth in unpaid corporation tax from small businesses, applying a carbon charge to long-haul flights and shipping, and expanding taxation of sugar and salt.

“Policy U-turns, higher borrowing costs and lower productivity growth mean that the chancellor will need to act to avoid borrowing costs rising even further this autumn,” Mr Corlett said.

“Significant tax rises will be needed for the chancellor to send a clear signal that the UK’s public finances are under control.”

He added that while any tax rises are “likely to be painful”, Ms Reeves should do “all she can to avoid loading further pain onto workers’ pay packets”.

The government has repeatedly insisted it will keep its manifesto promise not to raise income tax, national insurance or VAT.

A Treasury spokesperson said in response to the think tank report it does “not comment on speculation around future changes to tax policy”.

Chancellor urged to freeze alcohol duty

Meanwhile, Ms Reeves has been urged to freeze alcohol duty in the upcoming budget and not increase the rate of excise tax on alcohol until the end of the current parliament.

The Scotch Whisky Association (SWA), UK Spirits Alliance, Welsh Whisky Association, English Whisky Guild and Drinks Ireland said in an open letter that the current regime was “unfair” and has put a “strain” on members who are “struggling”.

The bodies are also urging Ms Reeves “to ensure there will be no further widening of the tax differential between spirits and other alcohol categories”.

A Treasury spokesperson said there will be no export duty, lower licensing fees, reduced tariffs, and a cap on corporation tax to make it easier for British distilleries to thrive.

Leave retailers alone, Reeves told

This comes as the British Retail Consortium (BRC) warned that food inflation will rise and remain above 5% into next year if the retail industry is hit by further tax rises in the November budget.

The BRC voiced concerns that around 4,000 large shops could experience a rise in their business rates if they are included in the government’s new surtax for properties with a rateable value – an estimation of how much it would cost to rent a property for a year – over £500,000, and this could lead to price rises for consumers.

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Latest ONS figures put food inflation at 4.9%, the highest level since 2022/2023.

The Bank of England left the interest rate unchanged last week amid fears that rising food prices were putting mounting pressure on headline inflation.

“The biggest risk to food prices would be to include large shops – including supermarkets – in the new surtax on large properties,” BRC chief executive Helen Dickinson said.

She added: “Removing all shops from the surtax can be done without any cost to the taxpayer, and would demonstrate the chancellor’s commitment to bring down inflation.”

High Street beauty chain Bodycare is to close its 56 remaining stores, resulting in 444 redundancies, administrators have said.

Last week it announced the closure of 30 shops, having collapsed into administration earlier this month.

A shortage of stock and the cost of running stores meant it was no longer viable to keep its 115 stores open, administrators said at the time.

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