Chancellor Rishi Sunak’s latest coronavirus news is a package of employment support, designed to replace the expiring Coronavirus Job Retention Scheme (CJRS) more commonly known as the furlough scheme. It runs out at the end of October.
Sunak’s new employment measures include allowing businesses the option to keep employees in work, on shorter hours, with the government supporting the wage deficit. Employees must work a third of their normal hours, and be paid for that work, by their employer. The government and employer will then pay two-thirds of the lost pay. All employers will be able to participate, whether or not they have participated in the furlough scheme. The proportion of hours is Sunak’s code for “viable jobs,” meaning that restaurants that are simply unable to open by the end of October, or who cannot afford to pay their proportion of wages, will have no recourse to additional job support.
Eligibility will also be more stringent for “large” businesses, who will have to prove that their turnover has been adversely affected by COVID-19 before being able to apply.
U.K. Hospitality responded to news by urging the government to go “further” for the sector both hardest hit by the pandemic and now reeling from new curfew restrictions. It proposed the government picking up the full cost of “unworked hours” in its “viable jobs” plan, but did not comment on the tension of rating viability in an industry ordered to be less viable for the sake of public health just days ago.
Sunak also extended the existing self-employment grants, with both schemes running for six months. He then changed the terms of the bounce-back loans scheme, allowing businesses more time to make repayments and allowing any business to apply to suspend repayments entirely for six months. Finally, the VAT cut, which many hospitality businesses have heralded as vital, will remain at 5 percent down from 20 percent until 31 March 2021.
Labour shadow chancellor Anneliese Dodds pointed out that the deadline for redundancy consultations from firms wishing to dismiss staff at the end of the furlough scheme passed last week, suggesting that the announcement was too late for some businesses and employees.
The announcement comes after weeks of pressure from the restaurant world, where 900,000 staff remain on full furlough. Staff costs are normally restaurants’ biggest expenditure after rent, and the coming end of the furlough scheme was perceived by many restaurants as a cliff edge for their employees. The hospitality industry has long lobbied on multiple fronts for an extension to the furlough scheme, insisting that 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. U.K. Hospitality’s Kate Nicholls said that 1 in 5 premises remain closed in an interview this week.
The government’s new coronavirus curfew restrictions appear to come into conflict with a job scheme pivoting on “viable” employment. Curbing restaurant services and reducing revenue in dining rooms even further than social distancing guidelines already do will necessarily have an impact on a business’ viability alongside the impact of the novel coronavirus itself. The exclusion of service charges — a key criticism of the furlough scheme throughout lockdown — will remain a big concern, especially when hours are being reduced.
Moreover, previous government interventions — particularly on eviction protections and the extension of coronavirus loan schemes — have felt more like stays of execution than tangible solutions. The former buys restaurants time but offers no adjustment of rent bills for businesses that have lived with zero, and then reduced revenue for nearly a year by the time it expires; the latter suffers from the fact that all loans are debt. These measures, by contrast, should provide employees with some assurance; one of the successes of the furlough scheme compared to its loan brethren was that it was quick and easy to fulfil for employers, and allowed many businesses and staff alike to remain employed and stay open. Longer-term, without rent assistance, and with current restrictions, this may not be enough, but right now a sector that felt it was falling off a precipice has something of a lifeline, even though its length is heavily limited.