Chancellor Rishi Sunak is expected to use his 2021 Budget to announce that the coronavirus wage support scheme will be extended from April until the end of September.
The Coronavirus Job Retention Scheme (CJRS) — widely referred to simply as “furlough” — was introduced last March and has been a key support mechanism for restaurant owners and their workers throughout the pandemic, safeguarding hundreds of thousands of jobs, its flaws relating to the exclusions of tips notwithstanding.
An announcement from the Treasury tonight, Tuesday 2 March, said that the extension of furlough meant “businesses and individuals will be supported through the roadmap and beyond.” The Budget will be delivered tomorrow, Wednesday 3 March.
Sunak himself said: “Now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead — and beyond.”
Per Prime Minister Boris Johnson’s “roadmap” reopening plan announced last week, restaurants, pubs, bars, and cafes in London will be able to open for outdoor customers for the first time since before Christmas on 12 April. Dining rooms and indoor hospitality can recommence a month later, on 17 May, with restrictions on household mixing in place until 21 June when the government hopes there will be a “full reopening” of businesses with minimal coronavirus restrictions in place.
The extension of furlough into the autumn suggests that the government is not banking on an immediate economic bounce-back across all sectors this summer, even if hospitality is likely to be among the first industries to reap the rewards of pent up demand, post-lockdown. But also, having extended the furlough scheme five times in 12 months, Sunak wants to make sure this is the last.
The scheme will remain unchanged for the months of May and June — with the government covering 80 percent of the wages, up to the value of £2,500 per month, for those unable to work because of the pandemic (with the exception of the costly National Insurance and pension contributions.) For the month of July, the government will ask employers to contribute 10 percent of that 80 percent, rising to 20 percent in August and September.
“As restrictions are eased and the economy begins to reopen, businesses will be asked to contribute alongside the taxpayer to the cost of paying their employees for hours not worked,” the Treasury said.
Extending the scheme “beyond the point of full reopening of the sector is a welcome move,” U.K. Hospitality chief executive Kate Nicholls said in a statement. Though she added that asking businesses to contribute 10 percent from July was “a worry” and that the continuation of National Insurance contributions by employers was “disappointing.”
“It will place unnecessary pressure on fragile businesses just as they are beginning to get back to their feet,” Nicholls said.
Elsewhere, for the self-employed, the Treasury has announced a fourth “SEISS grant,” available to claim from April, which will be worth 80 percent of three months’ average trading profits, up to £7,500.
From tomorrow’s Budget, restaurants and the wider hospitality sector have been awaiting a status update on the four principal areas of government support — decisions which will impact their short and medium-term future and likely determine whether they will reach the point of reopening this spring. Furlough was one. They now await news on extensions to the VAT rate cut, the business rates holiday, and the confirmation of a new package of grants.
More on the Budget tomorrow.