Pressure on firms eased as Sunak extends jobs support
Dame Carolyn Fairbairn: ‘Government deserves credit’ (pic: Terry Murden)
The Chancellor Rishi Sunak has extended the Job Retention Scheme to the end of June.
It allows firms to “furlough” employees – keep them on the staff without them working – with the government paying cash grants of 80% of their monthly wages up to a maximum of £2,500.
It was originally open for three months and backdated from the 1 March to the end of May, when the Treasury had hoped the economic picture might brighten.
It is expected that the devolved administrations will fund the same extended period.
Dame Carolyn Fairbairn, CBI Director-General, has welcomed the move, saying it will help protect the economy and prevent unnecessary job losses through this new lockdown phase.
“Once again, the Government deserves credit for showing agility in the face of unprecedented challenges,” she said.
“This extension means that firms will no longer be forced to issue redundancy notices over the next few to days to comply with 45-day consultation requirements, and can instead return to focusing on protecting jobs and their businesses’.
“No firm wants the Scheme to last for longer than it needs to, but it’s absolutely clear that these vital support systems must stay in place until it’s safe for people to return to work and we can begin to restart and revive our economy.”
Federation of Small Businesses (FSB) National Chairman Mike Cherry said: “Extending the retention scheme will provide a real lifeline for small employers – giving them space to plan ahead in the knowledge that government support will be there for another month. Following our conversations with government, it’s good to see this step forward.
Mike Cherry: ‘revenues drying up’
“With revenues drying up completely over the past three weeks, thousands of small employers have had to pay March’s payroll out of their own pockets. With April’s pay day fast approaching, it’s critical that the job retention scheme is firing on all cylinders when it launches on Monday.
“The retention scheme must pay out swiftly. Until now, the only means to easing the cashflow crunch for many small firms has been the, to date, lacklustre coronavirus business interruption loan initiative. Small business all over the country are on the brink today. They need cash now.”
Call for clarity
However, companies are becoming increasingly frustrated by the process of obtaining support.
Apsis, a construction technology firm, is calling on both the UK and Scottish Governments to provide clarification on the criteria for the Business Loan Interruption Scheme or see construction companies rebel against the lockdown.
As confusion and mixed messages continue to plague the construction industry there are growing concerns that the business rescue packages promised weeks ago will fail to support medium sized construction organisations from being eligible to access much needed lifesaving cash.
Dr Alex Reid, co-founder of Apsis said, “Desperate businesses are reporting a constant stream of rejections from mainstream banking based on the failure to meet strict lending conditions that the Chancellor did not state as a prerequisite to obtain financial support.”
FSB welcomes grant progress
The Scottish Government has released figures showing that £215 million of coronavirus grant funding has been released to 18,528 Scottish businesses. The Federation of Small Businesses (FSB) in Scotland welcomed the progress, but urged councils and government to deliver the grants more quickly.
Andrew McRae, FSB’s Scotland policy chair, said: “This grant funding could be the difference between success and failure for many smaller firms during the coronavirus crisis. And for that reason, we’re grateful for the funds that have been delivered to businesses already.
But we’d urge everyone involved in the delivery of this crucial support to do everything possible to process the applications and deliver the cash more quickly.”
The First Minister has also announced her intention to convene an Economic Recovery Advisory Group to plan how to rebuild the economy once restrictions are eased.
Mr McRae said: “The First Minister is right to lay the groundwork for recovery. And given that smaller firms and the self-employed form the bedrock of our local economies, this new group will need to consider their role and interests at every juncture.”