Trade associations welcome evolution of furlough scheme

Hospitality trade associations have welcomed the “pragmatic” evolution of the governments furlough scheme announced by the chancellor.

The new updates set out how employers will have to start sharing the cost of the scheme which will see  employers  pay National Insurance and pension contributions from August, then 10% of pay from September, rising to 20% in October.

From the 1 July firms will also be able to bring staff back part time, but will be responsible for paying their wages while in work.

Commenting on the announcement UKHospitality chief executive Kate Nicholls said the news was a “positive and pragmatic step” towards reopening the economy while “recognising that this recovery will take time”.

She said: “Giving businesses increased flexibility from the start of July is extremely welcome as hospitality looks to reopen its doors to the public. The move, which UKHospitality had been calling for, will allow more people back to work on a part-time basis and help venues ensure safety for customers and staff. 

“Flexibility is going to be crucial if businesses are to open and be economically viable with social distancing measures in place. The introduction of employer contributions to the scheme from August will put some businesses under particular strain, but the way it is tapered allows for a gradual adjustment. Further support for the self-employed is also helpful for many in our sector.”

However, she added that the Government “still needs to recognise that these costs will be difficult for hospitality businesses to bear”, and consider other measures to support the sector. 

She added: “This must include brokering a solution on rents, with Treasury contributions if necessary, and considering further grants to support businesses to reopen. If we can find a solution on rents and get an extension of the grant scheme, this will mitigate much of the impact of the reduced furlough. If we do not, a very difficult Spring would become a disastrous Summer for hospitality.”

Lex Butler, chair of the HBAA said: “We’re very pleased that, contrary to many national press reports, the employers’ contribution will start at National Insurance and increase gradually. However the sector has been closed for business since the start of the lockdown in March and will be the last to recover. By the end of the furlough scheme business events will only be just starting again, with smaller meetings.

“All of our members have had no income over the last few months and agencies will be in a very tough place with no prospect of income for 8 to 12 weeks once business starts moving again. Hotels and venues, many of which have been closed or operating at a loss to provide rooms for essential workers since lockdown, will also struggle to contribute to a scheme that has been a lifeline for business.”

She added: “If no concessions are made to businesses in our industry on the proposed contributions, the deluge of redundancies will be inevitable.”