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Government Floats Furlough Scheme Extension That Restaurants Desperately Need

Chancellor Rishi Sunak said the Treasury was modelling a “wide range of scenarios” once lockdown is eased

Rishi Sunak, whose coronavirus job scheme may be extended
Rishi Sunak is considering extending furlough scheme
Tolga Akmen/AFP via Getty Images

The restaurant and pub industry has been offered a glimmer of hope that the government will further extend the coronavirus furlough scheme in industries that have been hardest hit and which are likely to be impacted long after full lockdown has ended.

Chancellor Rishi Sunak said the government was modelling a “wide range of scenarios” and, according to the Times, a “sector-by-sector approach” once lockdown is eased — and the economy begins to gradually reopen. The Coronavirus Job Retention Scheme (CJRS) is due to end on 30 June.

Sunak told the House of Commons yesterday: “As we think about exiting from the economic and social restrictions, I will look at the right interventions for every sector.” He said that the Treasury’s priority was attempting to prevent as many workers from losing their jobs as possible.

The hospitality industry, which lobbied on multiple fronts last week for an extension to the furlough scheme, insists it is among the worst affected by the COVID-19 crisis: it was the first sector to close — and recognises that the long-term impact of continued social distancing measures will significantly hamper its ability to reopen for business. More, senior cabinet minister Michael Gove has said explicitly that pubs and restaurants will be among the last businesses to reopen.

Chief executive of trade body UK Hospitality, Kate Nicholls told Eater London this morning that an extension to the furlough scheme was vital for hospitality.

“With social distancing measures likely to be in place for some time, extension of the furlough scheme will be make or break for some businesses. Many will not be able to re-open and, of those that can, many will not be able to operate at full capacity,” she said. “If there is no option to furlough, businesses will undoubtedly be forced to lay staff off.”

Nicholls added that there must be flexibility in the measures designed to safeguard those worst affected in the coming months: “If the Government wants businesses to survive and jobs to be saved, the scheme must be extended. There also needs to be some flexibility to allow different workers to return to work at different times.”

There are four million workers furloughed across the U.K., at a cost of £42 billion to the taxpayer and the government is under pressure from industries to give notice on their plans. Businesses which are unable to reopen will be forced to decide next month whether to make workers redundant once government support is pulled. Employment law requires 30 – 45 days (depending on the size of the company) of employer consultation periods once those roles are identified as at risk of redundancy, with the furlough scheme currently slated to end on 1 July.

The job retention scheme, in which the government pays 80 per cent of the wages of furloughed workers up to £2,500 a month, was in fact extended by one month to the end of June a fortnight ago. Though it has been an essential safety net for restaurant businesses managing their way through the crisis, the exclusion of tronc payments in wage calculations last Thursday means that staff are set to receive significantly less than their regular monthly wage.

More soon.