Government U-turn over end of furlough scheme welcomed by business groups

November 5, 2020

Business West, the region’s largest business organisation, has welcomed the latest extension to the governments’ furlough scheme, but urged Chancellor Rishi Sunak to come up longer-term measures to protect firms.

Mr Sunak, pictured, this afternoon announced the furlough scheme would now run until the end of March, with the Treasury continuing to pay 80% of workers’ wages up to £2,500 a month. 

The U-turn, which came as the country entered a second national lockdown today, follows calls from business groups, unions and politicians for more support.

It also replaces Treasury plans – announced by the Chancellor last month – to pay a £1,000 job retention bonus to companies for every furloughed staff member they kept on until the end of January.

Phil Smith, pictured below, managing director of Business West – which runs the Swindon & Wiltshire Initiative – said: “A further extension of the furlough scheme and more generous grants for the self-employed are important steps in protecting jobs and providing certainty for our business communities beyond the immediate shock of a four-week lockdown.

“These changes give businesses significant reassurance over an uncertain winter, but many will understandably still wish for the government to give a clearer view of the road ahead.

“Government must set out longer-term measures over the next 12 months to give firms greater certainty and confidence to plan proactively, rather than to react to changes in support from week to week.” 

He said as well as support on jobs, reduced demand would impact firms’ cashflow. More generous grants would be required if those businesses were to weather a difficult winter ahead.

“Despite the Chancellor’s announcement, there are still many businesses and individuals who have, through no fault of their own, been unable to access any government support since the start of the pandemic and will require support if we are to avoid significant increases in unemployment and business failures,” he added.

“Ultimately, there can be no substitute for a fully functioning economy. Fundamentally, that means the government using the time afforded to them through another lockdown to significantly improve the test, track and isolate system, which remains key to keeping the economy open.” 

The CBI  said the Chancellor had “ built a bridge for business” to next spring and taken much-needed steps to help firms across the UK survive the winter.

“Extending the tried and trusted Job Retention Scheme will give companies the certainty and stability they need to help safeguard thousands of jobs into March,” CBI chief economist Rain Newton-Smith said, but added that sectors and supply chains under the greatest strain may need more tailored support in the coming weeks.

“The government must now use its time wisely and the review in January to get ahead of the curve and invest in a long-term vision for the economy,” she added.

“The Covid crisis makes the next six months even more crucial for government to pursue its levelling-up ambitions and work towards a net-zero economy. Investing in infrastructure, skills and innovation at the next Spending Round will lead to a swifter recovery and a brighter future for our country.”

The Chancellor also said the support through the Self-Employment Income Support Scheme (SEISS) would be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

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