The Chancellor needs to rethink his furlough plans given lockdown easing delay
With a delay to ‘Freedom Day’ (21 June) of four weeks announced by the Prime Minister on the 14 June and with the Treasury resisting any extension of the furlough scheme, Nigel Morris, Employment Tax Director at MHA MacIntyre Hudson, says a refusal to adapt the timetable for phasing out the furlough scheme will be self-defeating:
“The Chancellor ought to adapt the wind-down of the furlough scheme in light of the delay to Freedom Day in order to save jobs and livelihoods. This is especially true in sectors such as hospitality and tourism [CB1] which were waiting on 21 June to fully reopen their doors again. Unfortunately current reports suggest the Treasury is resistant to any change of plan.
“The Chancellor does not need to change the end-date of the scheme but just the phasing. Keeping government contributions at 80% throughout July - instead of going ahead with the proposed reduction to 70% support for businesses with a ‘mandatory’ 10% employer contribution - would be an enormous help given the delay to Freedom Day. Instead, the reduction to 70% government support should now start in August and the further 60% should begin in September.”
“Although it is sadly true, for some businesses the furlough scheme is just delaying the inevitable. However, there are many more companies and sectors where furlough is still a real life line which is enabling them to get by until they bring back all of their staff to work their normal hours. An end to furlough or a reduction in the money businesses can claim under the scheme when the income still isn’t coming in for them will lead to inevitable consequences and job losses. The Chancellor needs to show flexibility in the face of this set back.”
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