Furlough is changing; government hospitality funding will be reduced

From 1st July employers will have to contribute to the cost of keeping staff furloughed.

The scheme, which has been active since March of 2020, has cost the nation an approximate £66 billion so far. It involved the government paying a proportion of the wages for staff who could not work due to lockdown and government restrictions. This grant from the government extends to all businesses on the UK payroll and to any worker on any type of contract, including full-time, part-time, agency, flexible or zero-hour contracts.

However, after over 16 months of furlough, the government has changed the terms, and it’s worrying news for businesses who have been unable to open fully over the course of the year having sustained serious losses:

What are the furlough rule changes?

From July 1st new rules state the government will pay 70% of furloughed worker’s salaries and employers will pay a mandatory 10%.

The mandatory employer contribution will then rise to 20% in August and September, the government dropping down to 60%. It has been critical for employers to understand the exact dates for the changes, however with the date ranges being postponed five times, the timing is uncertain. A different Job Support Scheme (JSS) was due to start on 1st November 2020, but this has been postponed indefinitely.

Furlough has been extended four times already, but Boris Johnson and Chancellor Rishi Sunak both said recently that they do not want to extend furlough again. Despite this, evidence would suggest that if a large new wave of infections leads to another lockdown, the government will reconsider.

The scheme has undoubtedly helped to save millions of jobs. The furlough numbers peaked at 5.1 million and over 11.5 million jobs have been supported in total by the scheme since March 2020. Over a third of employers were using the furlough scheme at the end of April 2021. (These figures were reported by the government here)

What do venue owners and authorities think about the furlough changes?

Terry George, who owns the Mission night club in Leeds, told the BBC that he expected some of his staff would be made redundant as a result of the phase-out of furlough.

“We can’t afford to pay people out of a pot that has no money coming in,” he told the BBC’s Today programme. “We’re going to have to lose some staff.”

Bridget Phillipson MP said that over 400,000 businesses are being hit with new border rates and furlough costs:

Shadow School’s Minister, Peter Kyle argued we can’t have people laid off work because the law stops them from going to work, adding the furlough scheme should continue for industries that can’t reopen:

But for some it’s not about the finances or the time lost, its about doing anything to save lives.

One restaurant manager has been on and off furlough and gave his point of view to BBC Business. He encourages people to stay positive and that the restrictions now and throughout the pandemic have been necessary.

Where as Alex Proud, founder of Proud Cabaret, spoke as part of the #WeAreNightlife campaign on the need for reopening. He’s been a fairly outspoken critic on how the government handled lockdown and is more frustrated than most on being forced to close without sufficient funding. He feels hospitality has been unfairly treated, and these new changes reinforce that feeling even further.

Tristan Moffat, manager of Piano Works, also spoke as part of the #WeAreNightlife campaign, and reiterated that there is a need for support. He explains how there has been no cash put into the business in 15 months. And so taking away funding rather than providing it when venues need it most – and Freedom Day being still weeks away – it’s not helpful for struggling venues which need a strong reopening.