Businesses told they must keep their doors shut just hours before they expected to reopen will face ‘job crisis’ if they can’t afford to pay staff, Labour warns, as the government’s furlough scheme begins to wind down.
Shadow business secretary Ed Miliband said bosses are being left with the ‘stark choice’ of laying off staff or paying a ‘hefty financial burden’ as the Federation of Small Businesses (FSB) pleaded with ministers not to ‘pull up the business support drawbridge’.
Beauty salons, bowling alleys and other leisure venues were scheduled to welcome customers today for the first time since the coronavirus lockdown, while small wedding receptions and indoor performances were set to resume.
Businesses told they must keep their doors shut just hours before they expected to reopen will face ‘job crisis’ if they can’t afford to pay staff, Labour warns. Pictured: A sign on the shutters of a shop in Leeds which reads ‘We will be open again as soon as Boris says we can’
Chancellor Rishi Sunak puts up an ‘Eat Out to Help Out’ sticker – one of the policies he recently announced in his ‘coronavirus budget’
But Boris Johnson yesterday delayed the measures for at least a fortnight just as employers start paying National Insurance and pension contributions for furloughed staff, before having to contribute to their salaries next month.
Millions of workers are still being supported by the Job Retention Scheme, with much of the night-time economy also still closed and local lockdown measures imposing restrictions on businesses.
The furlough scheme begins tapering off with National Insurance payments before firms start contributing 10 per cent of furloughed employees’ salaries from September, rising to 20 per cent in October.
Former opposition leader Mr Miliband said ministers will be culpable for thousands of workers losing their livelihoods if they do not abandon the blanket withdrawal and recognise the scale of the ‘jobs crisis’.
‘Many businesses still have little or no cash coming in, but are trying to do the right thing and save their employees’ jobs,’ he said.
‘They now face the stark choice of letting go of their staff or facing a hefty financial burden to keep them on.
‘Businesses in vastly different sectors and circumstances should not be treated in this uniform way, and it is clearly unfair and illogical for those employers still locked down and unable to trade.’
Shadow business secretary Ed Miliband said bosses are being left with the ‘stark choice’ of laying off staff or paying a ‘hefty financial burden’
The Prime Minister had told a Downing Street press conference that he must ‘squeeze the brake pedal’ on easing restrictions amid signs Covid-19’s prevalence in the community was rising for the first time since May.
He also stalled pilots of gatherings in sports venues, forcing the snooker World Championships in Sheffield and the horseracing at Glorious Goodwood in West Sussex to go ahead this weekend without fans.
It comes as new research suggests more than half of furloughed employees have already returned to work ahead of the scheme being phased out.
FSB chairman Mike Cherry said: ‘One in five small firms have been forced to let staff go over the last three months. Even with critical emergency measures in place, jobs are sadly being lost in the here and now.
‘As we look to the autumn, it’s clear that we cannot afford to pull up the business support drawbridge any time soon.
‘Giving firms £1,000 for every employee they bring back from furlough is welcome, but Job Retention Bonus funds won’t manifest until next year – jobs are being lost today.
‘In addition to job retention, the Chancellor should be looking at job creation.’
Bowling alleys were among the venues scheduled to welcome customers today for the first time since the coronavirus lockdown
The Resolution Foundation said reports that nine million workers remained furloughed are ‘wide of the mark’.
The think-tank said its analysis suggests that the peak number of furloughed workers was almost eight million in late April.
Millions of furloughed staff have since returned to work, either fully or as partially furloughed part-time workers, meaning that fewer than 4.5 million employees are now furloughed, said the report.
The foundation said the peak and subsequent fall in the number of workers on the Job Retention Scheme demonstrates its success in protecting firms and employees during the lockdown’s introduction and easing.
Dan Tomlinson, senior economist at the Resolution Foundation, said: ‘The Job Retention Scheme has supported around a third of the private sector workforce at some point since lockdown began, protecting family incomes and preventing catastrophic levels of unemployment.
‘But, with the number of furloughed workers having peaked in late April, it is misleading to say that nine million workers are currently furloughed. Over half of these workers have now returned to work as lockdown restrictions have eased. The true figure is below 4.5 million.
‘But while furloughing is currently far less widespread than commonly claimed, there are still millions of employees without work, particularly in the hospitality and leisure sectors. These workers face a heightened risk of unemployment as the JRS starts to be phased out from today.
Boris Johnson yesterday delayed the reopening of some businesses for at least a fortnight just as employers start paying National Insurance and pension contributions for furloughed staff, before having to contribute to their salaries next month
‘The Chancellor should reduce this risk by phasing out support for these hardest-hit sectors more slowly.’
The Treasury said the ‘unprecedented’ scheme will have run for a total of eight months, supporting a total of 9.5 million jobs at a cost of £31.7 billion.
‘We continue to support closed sectors through our targeted package of support that includes tax deferrals and VAT cuts, business rates relief, rent moratoriums and loans. And we will continue to work closely with them during this difficult time,’ a spokeswoman said.
The move to allow more discretion for employers with regard to staff returning to work will continue to go ahead on Saturday, as will the lifting of the shielding advice for the most vulnerable people in England.
Professor Chris Whitty, the chief medical officer for England, warned the nation has ‘probably reached near the limit or the limits’ of what can be done to reopen society, meaning trade-offs may be needed in order to reopen all schools next month as planned.
Friday’s news came after local lockdown measures were announced in parts of the North West of England and areas of West Yorkshire, banning people from different households meeting indoors or in gardens following a spike in virus cases.
The new rules also banned members of two different households from mixing in pubs, restaurants and other hospitality venues, but these businesses will remain open for those visiting individually or from the same household.