An extension to the coronavirus job retention scheme (CJRS) is critical to the survival of restaurants and the wider hospitality industry, the sector’s principal trade organisation UK Hospitality has said today, ahead of Chancellor Rishi Sunak’s planned announcement on changes to the scheme this afternoon. The scheme is currently scheduled to end on 30 June but UK Hospitality chief executive Kate Nicholls said that as businesses begin to think about reopening, following the publication of the government’s COVID-19 recovery strategy, “it is vital that furlough support continues.”
UK Hospitality has written to the chancellor calling for continued support through the CJRS to “ensure that businesses survive, and jobs are saved.” As well a second extension to the scheme until the end of September on its current terms, 80 percent of worker wages paid by the government up to the value of £2,500, the trade body wants to see a removal of the three-week minimum term (furlough must currently be taken in minimum blocks of three weeks in order to be eligible for the funding) attached to it. The trade body wants the scheme to become more “flexible” — with the introduction of sector-specific “part-furlough schemes” where pay is shared between the government and the employer — as lockdown restrictions are lifted and some hospitality businesses contend with reopening.
UK Hospitality also wants to see the CJRS in place after September — until the end of the year, though does acknowledge that for October, November, and December, the scheme could be “tapered.” It does not specify what that means in terms of remuneration for staff, but Sunak is reportedly considering reducing the government’s contribution after June, and only until September, to 60 percent of salaries, capping it at £2,000 per month.
The need for additional, medium- and long-term support for the hospitality sector and restaurant industries is highlighted in the letter from UK Hospitality, which restates low levels of confidence among businesses with trading expectations as low as 88 percent on last year if businesses reopen in July.”
It adds that even by December, “trade will be markedly lower than last year, putting people’s livelihoods at risk without further support.” The trade bodies cite estimates that around 2.4 million people in the hospitality sector have been furloughed, higher than the number in any other sector in the U.K.
The letter does not mention the implications for the hundreds of thousands of staff from within the restaurant industry who are losing out from the scheme, receiving far less than 80 percent of their normal salary, because of the government-imposed exclusion of service charge (tronc) additions in employer calculations. Many in the industry have called for what is deemed to be a “discriminatory” injustice to be reevaluated by the government. Should changes to the scheme reduce the government’s contribution to worker wages yet further, staff are set to lose out even more significantly.
UK Hospitality chief executive Kate Nicholls said the furlough scheme has been a “crucial lifeline for many businesses and employees,” helping restaurants and other businesses in hospitality to overcome the initial crisis, save businesses, and protect jobs in the short-term. “Abruptly turning it off would be a disaster and undo the good work that the Government has already done,” she said.
She added that businesses in the hospitality industry would not be able to reopen or return to normal once lockdown restrictions had been lifted, which is why the sector needed additional support from the government. “When lockdown lifts, a substantial number of hospitality businesses will be unable to reopen again and many of those that can will still be operating far under normal capacity. Even best-case scenario predictions pointing to a huge drop in trading,” Nichols said.
If the hospitality industry does not receive an extension to the furlough scheme, Nicholls said “we are looking at an even greater threat to a sector that has already been hammered.”
Sunak is expected to present his plans on the furlough scheme at the government’s daily press briefing at 5 p.m. this evening, Tuesday 12 May.