Coronavirus: Furlough scheme must be replaced, says CBI

By Brian Meechan
BBC Wales business correspondent

  • Published
Media caption,

Pub and restaurant owner Cerys Furlong says the industry is expecting more problems

The furlough jobs scheme needs to be replaced when it ends to support the hardest-hit businesses, an industry body has said.

Tourism, hospitality, leisure and aviation are some of the sectors still looking to recover from the pandemic.

CBI Wales director Ian Price said some firms may face paying a "larger chunk".

The Treasury said: "We've not hesitated to act in creative and effective ways to support jobs and we will continue to do so as we recover from this crisis."

Mr Price anticipated workers might be hit in the pocket under any new scheme compared with furlough, which had paid 80% of salaries at one point.

He said the new scheme was only likely to apply to the worst-hit sectors.

What is the furlough scheme?

Since March, almost 10 million people have been placed on the furlough scheme, which pays the wages of those who cannot work because of coronavirus.

Businesses now have to contribute towards the salaries of their furloughed staff and the scheme is due to end on 31 October.

Chancellor Rishi Sunak has repeatedly ruled out extending the scheme, which is officially called the Coronavirus Job Retention Scheme.

Instead, the UK government intends to offer firms:

  • £1,000 for every furloughed employee kept on until at least the end of January
  • £1,500 for every out-of-work 16-24 year-old given a ''high quality'' six-month work placement
  • £2,000 for every under-25 apprentice taken on until the end of January, or £1,500 for over 25s
Image caption,
It has been tough times for pubs such as Cardiff's The Lansdowne

'Some businesses may not survive until Christmas'

Cerys Furlong owns two pubs and a restaurant in Cardiff, which employ 40 people.

Most of her furloughed workers returned by the start of August when restrictions on customers being inside were lifted, but she is now expecting more problems.

She said rising Covid-19 cases and local lockdowns have damaged customer confidence.

Businesses need more financial support from UK government, she said, but did not think firms and employees should shoulder more costs if there was a new scheme.

Image caption,
Cerys Furlong runs The Grange pub, the Milkwood restaurant and The Lansdowne pub

"We have to remember that our employees have already taken an enormous financial hit, if they've been on furlough and receiving only 80% of their salary for months on end," she said.

"And also small businesses' cash reserves, we don't have any more cash to be able to plug those gaps, so I think it's unrealistic to expect businesses to do it.

"It might be something that works for bigger businesses but the reality for many small independently-owned and run businesses, without additional government support over the coming months, they won't survive until Christmas."

Ms Furlong said extending the full furlough scheme to the worst hit sectors would help, as well as support with issues such as tax bills.

Mr Price added: "Quite clearly we need some targeted support once the Job Retention Scheme runs out.

"There needs to be an announcement, potentially from UK government, fairly quickly to suggest there will be something there for some of the sectors that need it most."

He said people were facing tough decisions over redundancies this week to allow the process to be completed when the furlough scheme ends in October.

Furniture manufacturing is one area of concern, with the British Furniture Confederation fearing nearly half of all jobs in the sector could be lost.

Its manufacturers forecast sales will be down by about 25% to 30% this year.

Mr Price said any replacement support would be more targeted and aimed at helping those businesses that have "really been hit hard".

Mr Sunak said looking for new ways to protect jobs was his "number one priority", after the UK unemployment rate hit its highest level in two years.

The Treasury said the furlough scheme, which has helped 378,400 workers in Wales, has done what it was designed to do - save jobs and help people back into employment.

"And many of our unprecedented interventions - including the Job Retention Bonus, business rates holidays, VAT cuts and the Kickstart Scheme - will ensure this support continues into next year," said a spokesman.