UK firms face ‘difficult decisions’ when furlough scheme winds down
UK firms have said they will struggle to contribute to furloughed workers’ salaries from August, as the Treasury slowly winds down the job retention scheme.
In an Institute of Directors (IoD) survey of almost 700 company directors, a quarter said they could not afford the 20 per cent or more needed to contribute to furloughed workers’ full-time salaries.
Around half of those using the scheme said they could provide the amount needed between August and October.
Earlier in May, the Chancellor Rishi Sunak announced that the furlough programme would be extended by four months until the end of October. However, he said companies would have to meet some of the cost from the end of August.
The latest figures released yesterday show 8.4m people have been furloughed, with over a million firms using the scheme.
In addition, the value of such claims has now risen to a total of £15bn, a considerable increase from the previously reported figure of £11.1bn.
Over a third of those using the scheme said they would bring the majority of their furloughed workers back part-time, if allowed. Less than one in ten said they would not bring anyone back part-time.
Southbank Centre this week called for an extension of the scheme beyond October. The arts charity predicted it will be closed until April 2021 and has called on the government to help those furloughed in the creative industry.
Jonathan Geldart, Director General of the Institute of Directors, said: “The government must soften the blow by introducing as much flexibility as possible into the furlough system. The more flexible the scheme is, the better firms can recover, and the fewer jobs will rely on state subsidy.”
The majority of those polled said they would make use of shorter minimum furlough periods. Currently, staff must be on furlough for at least three weeks.
“Business leaders know that the Government’s support can’t be infinite, but the ugly truth is that if there’s no money coming in the door, many firms will be forced to make difficult decisions come August,” added Geldart.
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