Fri 29th May 2020 - Chancellor reveals new furlough arrangements, but no hospitality concessions Chancellor reveals new furlough arrangements, but no hospitality concessions: Chancellor Rishi Sunak has announced the extension of the flexible furlough option to the government’s Coronavirus Job Retention Scheme, but confirmed employers across all sectors will begin making a contribution in wages from the start of August. Sunak said the flexible furlough scheme, now beginning on 1 July instead of August, would enable employers to pay staff for the days they work and claim on the furlough scheme for the other days. However, there were no direct concessions in regards to the scheme for the hospitality sector. In June and July, the scheme will continue as before with no employer contribution at all. The government will pay 80% of furloughed people’s wages, up to a maximum of £2,500. In August, the taxpayer contribution to people’s wages will stay at 80%. Employers will be asked to cover National Insurance and employer pension contributions, which the government said, for the average claim, accounts for just 5% of total employment costs. By September, the chancellor said employers will have had the opportunity to make changes to their workplaces and business practices. In October, taxpayers will pay 60%, and employers will contribute 20%. Sunak said: “Then, after eight months of this extraordinary intervention of the government stepping in to help pay people’s wages, the scheme will close.” In terms of the new flexible furlough, from 1 July, the chancellor said employers will have complete flexibility to decide on the right arrangements for them and their staff. He said: “For instance, your employer could bring you back two days a week. They pay you for the two days and the furlough scheme covers the other three. To introduce this new, flexible furlough from 1 July, we need to close the old scheme to new entrants on 30 June.” Employers wanting to place new employees on the scheme will need to do so by 10 June, to allow time to complete the minimum furlough period before then. UKHospitality chief executive Kate Nicholls said: “This is a positive and pragmatic step towards reopening the economy while recognising this recovery will take time, particularly in hospitality. Giving businesses increased flexibility from the start of July is extremely welcome as hospitality looks to reopen its doors to the public. The move, which UKHospitality had been calling for, will allow more people back to work on a part-time basis and help venues ensure safety for customers and staff. Flexibility is going to be crucial if businesses are to open and be economically viable with social distancing measures in place. The introduction of employer contributions to the scheme from August will put some businesses under particular strain, but the way it is tapered allows for a gradual adjustment. Further support for the self-employed is also helpful for many in our sector. The government still needs to recognise these costs will be difficult for hospitality businesses to bear, and consider other measures to support the sector. This must include brokering a solution on rents, with Treasury contributions if necessary, and considering further grants to support businesses to reopen. If we can find a solution on rents and get an extension of the grant scheme, this will mitigate much of the impact of the reduced furlough. If we do not, a very difficult spring would become a disastrous summer for hospitality. We hope the government bears in mind that many high street businesses will be reopening in the next couple of weeks, whereas hospitality will be forced to survive for an additional month, at the very least, on this reduced form of furlough.” The British Beer & Pub Association (BBPA) welcomed some aspects of the new furlough scheme, including the additional flexibility and gradual tapering from August. However, it warned for the tapered support to work, all pubs need to be open and operating at a sustainable level by the time the tapering kicks in. The trade association also welcomed the chancellor has brought forward flexibility for furloughing from August to July. However, the detail remains to be seen on how it will work in practice. If pubs are to reopen on 4 July, then being able to bring flexible furlough further forward to help the process of getting pubs ready to open would be greatly welcomed. BBPA chief executive Emma McClarkin said: “Expecting pubs to contribute to furlough costs if they are closed or operationally unviable is simply not feasible. Preventing pubs from reopening as the furlough support reduces means those pubs will have no income to cover the additional staff costs – risking job losses and pubs staying closed for good.”