Business bodies urge chancellor to ‘go further’ with new furlough scheme

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Businesses in the hospitality sector have said Rishi Sunak’s support package “must go further” to avoid wide-scale job losses, after the chancellor today unveiled a new furlough scheme for businesses facing local lockdowns.

Sunak today said the government will pay two thirds of employees’ salaries to businesses forced to shutter under fresh lockdown measures. 

Read more: Luke Johnson: 1m employees on furlough face redundancy

Firms whose premises are legally required to shut “for some period over winter as part of local or national restrictions” will receive grants of up to £2,100 per month to pay the wages of staff who cannot work.

Sunak said: “Throughout the crisis the driving force of our economic policy has not changed. I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves.”

‘Must go further’

Greene King chief executive Nick Mackenzie said: “The latest support measures announced by the chancellor provide a lifeline to pubs forced to close but [don’t] go far enough when we’re facing devastating restrictions in an increasing number of areas.

Greene King earlier this week announced it was preparing to permanently close 26 sites across the UK, putting hundreds of jobs at risk as lockdown restrictions continue to weigh on the sector.

Mackenzie, who yesterday joined a coalition of pub bosses calling on the chancellor to extend the furlough scheme, said the current 10pm curfew was already “making it increasingly unviable for pubs to trade and threatening more closures”.

“The winter is set to be an incredibly difficult time for the industry and the sector needs help to take a longer-term view,” he added.

Trade body UK Hospitality, which represents more than 700 companies and 65,000 venues across Britain, welcomed the announcement but said further support was “crucial” for businesses already struggling to survive.

Chief executive Kate Nicholls said: “Paying two thirds of wages for employees in lockdown is a welcome step and it is encouraging to see that the chancellor has introduced flexibility and a sector-specific approach.

“However, worryingly, it does nothing to address the issues faced by sector businesses operating well below capacity due to restrictions and consumers avoiding travel and struggling to keep their workforce employed.”

Nicholls added that the government’s introduction last month of a 10pm curfew for all hospitality venues “has been crippling” for many businesses, with sales down 30 per cent even in low areas of infection.

“The need now is no less — possibly is even more — than the first lockdown, so a more comprehensive package of financial support is crucial,” she added. 

“The financial support on offer must go further if tragic levels of closures and redundancies are to be averted.”

Rishi Sunak announced the support measures today as England faces further local lockdowns

Front foot forward

Businesses will not be required to contribute to wages under the new scheme, but will have to cover National Insurance and pension contributions.

Roger Barker, director of policy at the Institute of Directors (IoD), urged the government to slash all payment liabilities for firms facing local lockdowns.

“The Treasury has understandably focused on defensive measures, but it should also try to get on the front foot where possible,” said Barker.

“To help those firms who are finding chinks of light to create jobs, employer national insurance costs should be cut. Tax reliefs to support substantial investment in technology, the green economy, and skills will help create new opportunities to replace those being negatively impacted by the pandemic.”

“The government should also remain alive to the potential second-order impacts of local lockdowns – which will affect firms in other areas and across the supply chain,” he added. 

The Federation of Small Businesses (FSB) said the new support measures would “bring some hope to those businesses which are still bearing the brunt of restrictions,” but warned the support package will not apply to all struggling businesses.

“We now need to look at what comes next in terms of further evolution of support mechanisms, especially for those who will not directly benefit from today’s announcement,” said FSB chair Mike Cherry.

“A comprehensive rescue package for those excluded is urgently needed. Policymakers should also go further to cut day-to-day overheads for small firms. Our business rates system remains an outdated drag on too many, despite very welcome efforts to relieve the strain for some.”

Read more: Around 5m workers were furloughed in July amid uneven recovery

Cherry echoed the IoD’s calls to scrap the requirement for businesses to pay National Insurance and pension contributions.

“With thousands still struggling to access bounce back loans, the Treasury should now be looking at what succeeds emergency loan schemes to ensure that banks keep lending to small firms beyond the end of this year, thereby stimulating the real economy,” he said.

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