Chancellor Rishi Sunak has announced that the furlough scheme will be extended until the end of September 2021, as part of the government’s latest efforts to support the beleaguered hospitality businesses.
The extension is the same as the current furlough set-up, employees will receive 80% of their wages, but businesses will then have to contribute 10% in July, and 20% in August and September as the scheme is phased out.
Commenting on the news that the furlough scheme will be extended until the end of September, UKHospitality Chief Executive Kate Nicholls said: “Extending the full scheme up to and beyond the point of full reopening of the sector is a welcome move. It will help keep businesses afloat and more jobs secure as they trade their way back to prosperity in the years to come. This means it is more important than ever that the Government sticks to its plan to allow full reopening of venues on the 21st of June.
“Expecting businesses to contribute to the scheme from the end of July is a worry, though. It will place unnecessary pressure on fragile businesses just as they are beginning to get back to their feet. It is also very disappointing not to have employer National Insurance Contributions removed from the scheme. Businesses are burning through their cash reserves and many will have exhausted them before they have a chance to reopen. Not all businesses are going to be out of the traps instantly. It will take time for them to reopen and they will be racking up costs in the meantime.
“It is now more important than ever that the Chancellor delivers a wider package of support in his Budget statement. Extended furlough alone will not be enough to give businesses the support they need to survive the Spring and Summer, particularly if businesses are now incurring additional costs. We must have an extension of the VAT cut and business rates holiday if we expect to see businesses survive and thrive after the crisis has passed.”
The chancellor’s furlough extension follows an announcement earlier this week hospitality businesses will also be eligible for further grants to help businesses restart their venues this summer, including grants of up to £18,000
An additional £425m has also been added to the Additional Restrictions Grant fund to help those not receiving the grants.
Hannah Strawbridge, founder of Han Law, comments: ‘Businesses and employees within the hospitality sector in particular may be breathing a sigh of relief at the news that the furlough scheme will be extended until September. BUT – does this suggest that the ‘new normal’ is going to emerge later than hoped? And why have businesses and advisers had to revisit this on numerous occasions, with furlough being extended so many times?
The question is whether the additional assistance to employees and businesses is necessary and required given the debt the country will be facing, given that the restriction lifts have been set a few months before September and given that the government has said that most individuals will have been vaccinated before that date. Many self-employed people or business owners without employees may argue that the support to them hasn’t been enough.
There are businesses placing their employees on furlough who will remain on furlough now until September. However, some of those businesses have known that they will still be made redundant at the end of the period – which arguably was never the intention of the scheme, aptly named ‘Job Retention Scheme’.
Without wanting to appear overtly negative about the announcement, it is hard not to feel worried for the future of the country and those generations who will be footing the bill for these difficult times’