Restaurant workers still retained by their employers will have 80 percent of their wages paid until March next year after the government has announced it will extend the Coronavirus Job Retention Scheme (aka furlough) until the end of the first quarter in 2021.
The announcement — another government u-turn — comes after the industry’s principal trade body UK Hospitality wrote to chancellor Rishi Sunak on Tuesday, requesting that a package of support from the government be commensurate with the severity of new lockdown restrictions and the likely effect those will have on hospitality businesses’ chances of recovery. The body had asked that furlough be extended until the end of April next year — and that it include a “flexible support” programme, the like of which was introduced for the months of August, September, and October, incentivising employers to return more workers back on fewer hours, while theoretically still offering a “full” wage.
Sunak had planned to replace the furlough scheme with a new, less generous Job Support Scheme this week, but the Prime Minister’s announcement on Saturday that non-essential businesses in England would close forced a rethink in the Treasury. Speaking in the House of Commons this lunchtime, the chancellor said: “I’ve always said I would do whatever it takes to protect jobs and livelihoods across the U.K. — and that has meant adapting our support as the path of the virus has changed.”
Sunak added: “It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support.” The chancellor also announced that the support offered to those self-employed would be increased from 55 to 80 percent of trading profits, up to a maximum of £7,500.
There is however no sign yet of flexible support programme from the government, but Sunak said the scheme would be reviewed in January in order to assess whether employers would need to contribute to the wages of unworked hours.
In response to the chancellor’s announcement, UK Hospitality said the extension was “a big boost” and “key to the future survival of the sector” but that a broader package of support was still needed.
“Hospitality is facing a tough winter ahead [...] and businesses will need additional support if they are to survive,” chief executive Kate Nicholls said. “We will need enhanced grant support to keep venues alive and a solution to the ongoing rent debt problem that continues to linger over the sector. These must come alongside a clear roadmap for a return to business. Without these, the extended furlough scheme alone is not enough to keep hospitality alive and will have been a wasted investment of public funds.”
On the critical issue of rent, which, through a combination of avoidance, delay, and magical thinking remains unresolved, is high on UK Hospitality’s agenda. It is now likely that the lease forfeiture moratorium will be extended (for a fourth time) until some time in the first quarter of the new year. UK Hospitality have requested its extension from the end of the year until 30 June 2021. But alone that solves nothing; it merely moves the problem into an uncertain future. A spokesperson for the trade body also told Eater: “We essentially need an equitable and workable solution as soon as possible — bounceback grants would be an elegant solution.” Proposals that included the bouceback grants were put to the government as early as August this year.
In a statement, Nicholls added that surviving this winter was “just the first step,” reiterating the call for an extension to the business rates holiday for the whole of 2021/22 — a request echoed by Mayor of London, Sadiq Khan — and an extension of the VAT reduction. A spokesperson for UK Hospitality told Eater that a reduction to “percent percent would be ideal, but if it has to be higher then it needs to be at a level that makes us competitive with other tourism destinations, such as France, Germany, Ireland, [whose pre-Covid rates ranged between seven and nine percent.]”