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Bosses across UK warn that furlough scheme is ‘not a permanent solution’

Bosses have warned there will inevitably be mass job losses when employers are asked to start sharing up to 50 per cent of the cost of the government’s furlough scheme in August. 

Industry experts also claim Chancellor Rishi Sunak’s extension to the Job Retention Scheme – where the Treasury bankrolls 80 per cent of wages – is merely delaying redundancies.

Companies in are also concerned they will not be able to stump up the cash to keep workers on furlough from August, when they will be asked to foot some of the cost.  

Mr Sunak yesterday announced the scheme would be prolonged until October but that businesses would ‘start sharing’ the financial burden with the Exchequer.

It set alarm bells ringing throughout UK Plc which demanded assurances for businesses in ‘dire straits’. 

Representatives from the sectors hardest hit from the lockdown, have voiced concern that even the Chancellor’s hundreds of billions in bailout will not go far enough. 

The retail sector, which has seen sales nosedive as shops remain shuttered, will ‘inevitably’ have fewer store staff going forward, it is feared. 

Richard Lim, chief executive of Retail Economics, told MailOnline: ‘There’s no two ways about this there will be fewer jobs in retail as we emerge out of this crisis. 

Industry experts also claim Chancellor Rishi Sunak’s extension to the Job Retention Scheme – where the Treasury bankrolls 80 per cent of wages – is merely delaying redundancies

Retail Economics CEO Richard Lim predicted job losses in the retail sector

Kate Nicholls, CEO of UKHospitality, warns that the 80 per cent wage subsidy would need to be extended past July to help struggling businesses

Retail Economics CEO Richard Lim (left) predicts job losses in the retail sector while Kate Nicholls, CEO of UKHospitality (right), warns that the 80 per cent wage subsidy would need to be extended past July to help struggling businesses

The retail sector, which has seen sales nosedive as shops remain shuttered, will 'inevitably' have fewer store staff going forward, it is feared (Oxford Street in London pictured)

The retail sector, which has seen sales nosedive as shops remain shuttered, will ‘inevitably’ have fewer store staff going forward, it is feared (Oxford Street in London pictured)

‘There will be administrations that are yet to happen. The government’s support measures are providing a lifeline to keep businesses afloat and preserve cash and continue to operate and allow them the working capital to do that. 

He added: ‘For some businesses, they will have some staff on furlough who they will realise that are unlikely to be coming back to the same roles as before, if they have those roles at all.’ 

Mr Lim added that retailers would likely shift more weight behind online selling and would ‘absolutely try’ to retain store staff if possible, but this could mean fewer hours or job sharing.

The picture in the travel sector looks equally as bleak, with summer holidays abroad all but cancelled for Britons. 

Airlines have been forced to furlough thousands of staff as countries around the world enforce flight freezes to stem the spread of the virus.

IAG, the parent company of British Airways, said the Chancellor’s extension to the furlough funding will not plug the enormous loss of revenue in the long-term.

Mr Sunak yesterday announced the scheme would be prolonged until October but that businesses would 'start sharing' the financial burden with the Exchequer from August

Mr Sunak yesterday announced the scheme would be prolonged until October but that businesses would ‘start sharing’ the financial burden with the Exchequer from August

IAG CEO Willie Walsh praised the extension but said it was not a permanent fix to the crisis

IAG CEO Willie Walsh praised the extension but said it was not a permanent fix to the crisis

It said in a statement to MailOnline: ‘We welcome the Chancellor’s decision to extend the Job Retention Scheme and, as Willie Walsh said at the Transport Select Committee yesterday, we applaud his swift action in dealing with this crisis. 

‘However, while this brings some welcome relief, it’s not a permanent financial solution. 

‘It merely buys us a few extra days to address the restructuring that our business requires to survive this unprecedented crisis.’ 

The immediate future of hospitality businesses also remains uncertain, with warnings that pubs and restaurants could remain closed for many months.

It is feared bosses with no revenue stream and lofty overheads will not be able to pay half their furloughed employees’ wages.

Patrick Langmaid, who owns the Mother Ivey’s Bay holiday park in Padstow, forecast making tough job cuts.

Airlines have been forced to furlough thousands of staff as countries around the world enforce flight freezes to stem the spread of the virus. IAG, the parent company of British Airways, said the Chancellor's extension to the furlough funding will not plug the enormous loss of revenue in the long-term

Airlines have been forced to furlough thousands of staff as countries around the world enforce flight freezes to stem the spread of the virus. IAG, the parent company of British Airways, said the Chancellor’s extension to the furlough funding will not plug the enormous loss of revenue in the long-term

‘We are very worried about how we, as employers, are going to make contributions through August, September and October,’ he told the BBC.

‘I’ve already started briefing my team that there will have to be redundancies.’

Kate Nicholls, chief executive of UKHospitality, which represents the industry, welcomed the scheme’s extension, but warned: ‘The full 80 per cent may need to be extended past July for some businesses in sectors like hospitality that will still operate at much reduced levels of trade, or not yet be able to open.’ 

The Chancellor has also been warned that extending the scheme, and draining the public purse, will actually increase the likelihood of redundancies in the long-haul. 

Professor Len Shackleton of the Institute of Economic Affairs said: ‘ The longer businesses are dependent on the furlough scheme, and unable to begin reorganising staff and adjusting their business models, the less likely it is that people will have jobs to return to once the lockdown ends.

‘It will also delay individuals’ plans to seek other jobs where this is clearly going to be necessary.’

But he suggested that company executives are under pressure to keep staff on furlough, rather than making them redundant now, because of the backlash if they were to turn turn down the government’s funding.

He told MailOnline: ‘They would certainly be criticised by employees and unions for making staff redundant and forcing them on to Universal Credit, when the government is offering more money on the Job Retention Scheme.’ 

The Institute of Directors said: ‘We now need further clarity around employers’ contributions. Many firms that would normally be on strong footing are still in dire straits.’ 

Read more at DailyMail.co.uk


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