Furlough extension welcomed but UK hospitality sector needs more support

Industry leaders have cautiously welcomed the UK government’s plans to extend its furlough scheme for companies unable to pay all of their staff during lockdown.

The UK’s Coronavirus Job Retention Scheme, which pays wages of workers who have been placed on leave due to coronavirus lockdown measures, has been extended to lend more support to businesses unable to open.

Furloughed employees are currently receiving 80% of their salaries, paid by the government, up to £2,500 a month. Employers can also ‘opt in’ to top these salaries up.

The scheme was meant to end in July, but was extended until October last month.

On Friday (29) May, chancellor Rishi Sunak updated the scheme again. From August, employers will need to pay National Insurance and pension contributions, then 10% of pay from September, rising to 20% in October.

Kate Nicholls, the chief executive of UKHospitality said the extension is a “positive and pragmatic step towards reopening the economy while recognising that this recovery will take time, particularly in hospitality.”

She welcomed the increased increased flexibility, which will allow more people back to work on a part-time basis and help venues ensure safety for customers and staff.

“Flexibility is going to be crucial if businesses are to open and be economically viable with social distancing measures in place,” she said.

“The introduction of employer contributions to the scheme from August will put some businesses under particular strain, but the way it is tapered allows for a gradual adjustment. Further support for the self-employed is also helpful for many in our sector.”

However, she added that business owners still need more support to cover a backlog of debt accrued during the crisis, such as deferred rents. She suggested the treasury should offer support to landlords with hospitality tenants, and could also give further grants to support businesses to reopen.

“If we can find a solution on rents and get an extension of the grant scheme, this will mitigate much of the impact of the reduced furlough. If we do not, a very difficult Spring would become a disastrous Summer for hospitality.

“We hope the Government bears in mind that many high street businesses will be reopening in the next couple of weeks, whereas hospitality will be forced to survive for an additional month, at the very least, on this reduced form of furlough.”