Extension of Furlough Scheme Provides Short-Term Relief for U.K. Restaurants

The government’s Coronavirus Job Retention Scheme, designed to safeguard jobs as employees temporarily stop working, has been extended by one month — until the end of June. Significant numbers of restaurant staff, many of whom have been out of work since the government’s closure of all non-essential businesses on 20 March, have been among the total nine million workers to be furloughed in the U.K.

Chancellor Rishi Sunak said that the scheme would continue to be monitored “to ensure people and businesses can get back to work as soon as it’s safe to do so to drive U.K. economic recovery.” The implementation of the scheme which allows businesses to furlough employees with the government paying 80 percent of their wages up to a maximum of £2,500, was originally open for three months and backdated from the 1 March to the end of May.

The latest announcement presents some short-term relief for the restaurant industry, which has been almost completely shut down for a month. UK Hospitality chief executive Kate Nicholls says the trade body has been pushing the government hard for this announcement: “This extension itself is good news and will give us more breathing-room to help ensure employers are in a stronger position once they are in a position to reopen.”

Significantly, she added “the decision to keep the scheme under review could be absolutely critical for hospitality.” The restaurant industry is becoming increasingly aware of the need to think long-term, that reopening will mean different things to different businesses and that different forms of social distancing — outside of “lockdown” — are going to have major implications for the sector.

Nicholls said that the government’s pledge to keep the scheme under review will allow the industry “to continually make the watertight case that hospitality is a special case.”

She added: “Once the lockdown is lifted, social distancing measures are likely to remain in place. This will cause problems for the sector, which is all about socialising. Some businesses are not going to be able to immediately reopen and many more will not be able to reopen fully. With flexibility in the furlough scheme, it gives us a much better chance of keeping businesses alive and keeping our team members in jobs.”

Sunak said that any future decision would have to account for further “developments on the wider measures to reduce the spread of coronavirus, as well as the responsible management of the public finances.”

The portal through which the scheme will be administered, where companies apply for grants, is due to open on Monday. Given that businesses have faced difficulties in accessing the grants (through local authorities and councils) already promised by the government, as well as bank loans guaranteed by the Treasury, restaurants will hope that the implementation next week will be without comparable administrative hiccups.

More soon.