Rishi Sunak’s decision to extend the furlough scheme until the end of March has been welcomed by a number of struggling businesses, but others are not so happy.
The chancellor yesterday confirmed further extensions of the furlough and self-employed support schemes, enabling many businesses, including a number of property firms, to maintain their staff during the uncertain months ahead.
In a major U-turn by the government, Sunak said the move is needed because of the economic situation caused by the coronavirus crisis.
The chancellor, who is desperate “to give businesses security through the winter”, in order to “protect millions of jobs”, confirmed that the scheme will pay up to 80% of a person’s wage up to £2,500 a month.
He told the Commons that the government will review the policy in January.
However, Sunak has been criticised for announcing yet another extension only a matter of days after announcing the November extension.
Richard Churchill, business advisory partner at Blick Rothenberg, said: “Continual extension and modification does little to suggest the chancellor has a clear plan for the UK economy.”
He added: “The furlough extension is welcomed and finally the Chancellor is providing some longer-term measures in respect of England’s four-week lockdown. However, it would have made more sense to extend the furlough scheme for three months in the first place to give businesses certainty, given the critical winter and festive period.”
Churchill believes that the chancellor should have gone further and announced that the furlough scheme will be in place until June 2021 or even December 2021, although accepts that he can of course review and amend the scheme eligibility and assistance on a monthly basis.
He added: “The extension of the furlough scheme has come at a cost for some employers who have been counting on the Job Retention Scheme Bonus.
“For those businesses that have redesigned their businesses and may not be utilising the furlough scheme going forward but had accounted for the Job Retention Scheme Bonus this is a further change and blow to cashflow they will have to remodel quickly.
“This is yet another example of reactive changes by the chancellor causing difficulty for UK business. Surely those businesses not accessing the current furlough scheme should still have been eligible for the Job Retention Scheme Bonus.”
The chancellor has provided little assistance to businesses struggling with funding, according to Churchill.
Whilst the application dates or CBILS and bounce back loans have been extended to 31 January many businesses have already exhausted the scheme with its limit of £50,000 in exiting the first lockdown.
He continued: “We are now in a second wave of the virus and businesses will require additional funding to provide working capital to exit this lockdown. The availability and funding limit of these loans need to be reviewed and increased to provide businesses with additional access to finance in order they can fund their businesses out of this second lockdown.
“Once again there was no detail provided on the successor loan scheme announced by the Chancellor in his winter statement some weeks ago and whether this will provide the answers to the funding crisis facing businesses.
“It would also have been good to hear from the Chancellor his plans for business rates in 2021 as clearly those businesses in the most effected sectors primarily hospitality, leisure and entertainment need further relief in order to be viable.”
Comments (4)
I imagine most EA firms have sensibly trimmed their staffing costs already to sensible levels and in a marketplace that is still very busy I’m not sure many will want to lay off staff under Furlough. Most agents have huge sales pipelines to get through and sales are still happening a pace and will continue to do so under early December.
Totally different it seems to Lockdown 1.
The most important thing is for agents to do their bit where they can and if at all possible WFH as per the Gov directions.
I thought Teresa May had it bad ….but would you want to be in charge of a country during a Corona virus pandemic?
No neither would I …..
Richard Churchill is looking for long term stability at time when it clearly doesnt exist….its a moving target out there. Yesterdays extension of the Furlough scheme gives some stability/predictability until the end of March 2021 at least.
Job Retention Scheme Bonus = £1k one off payment per employee claimable in Feb 2021
Furlough scheme is 80% of salary and available now for the next 5 months
For any business owner genuinely struggling with loss of income and cash flow issues I know which one Id be happier with……
Thing is, whichever way you look at it, this is a quite breathtaking ‘helping hand from the UK Gov.
Those of a certain vintage must look on and think just WoW.
My grandmother tells me that when bombs were raining down on her she had to sit in a tin hut at the bottom of the garden, wait for the moment to pass and then scurry back to the house in the dark; She’d turn on the wireless, boil up a pan of hot water and get into bed almost fully clothed and wait for the PM’s update. Hoping she wouldn’t need to venture out into the garden for a a wee.
Me, I return to my centrally heated house, swill a couple of bottles of lager, chat to a few friends on Zoom and scan the latest offering on Netflix.
As I say, an amazing piece of policy. I can only think that the current Gov. have taken the view that it wiil be be someone elses problem to deal with in future years.
Thank the lord we control our own currency
There have been so many U-turns I’m no longer sure which way is forwards and which way is backwards.