Jobs ‘crisis’ warning as furlough wind-down begins and businesses remain closed

Prime Minister Boris Johnson during a media briefing in Downing Street (PA)
Prime Minister Boris Johnson during a media briefing in Downing Street (PA) - (Copyright PA Wire)
8:39am, Sat 01 Aug 2020
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Businesses expecting to reopen in England have been told to keep their doors shut by Boris Johnson on the day the furlough scheme preventing job losses begins winding down.

Beauty salons, bowling alleys and other leisure venues were scheduled to welcome customers on Saturday for the first time since the coronavirus lockdown, while small wedding receptions and indoor performances were set to resume.

But the Prime Minister 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.

Labour is warning that bosses are now left with the “stark choice” of laying off staff or pay “a hefty financial burden” of keeping them in employment – unless the Government adopts a more flexible approach.

Mr Johnson 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.

Millions of workers are still being supported by the furlough scheme, with much of the night-time economy also still closed and local lockdown measures imposing restrictions on businesses.

HEALTH Coronavirus - (Copyright PA Graphics)

The furlough scheme begins tapering off with National Insurance payments before firms start contributing 10% of furloughed employees’ salaries from September, rising to 20% in October.

Labour’s shadow business secretary Ed 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.”

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.

In other developments:

– The Office for National Statistics reported an increase in the number of people testing positive for coronavirus in England, with Mr Johnson saying the prevalence of the virus in the community is likely to be rising for the first time since May.

– The decision to postpone plans to allow indoor performances was described as a “bitter blow for the music industry”.

– Scotland’s First Minister Nicola Sturgeon advised people not to travel across the border to those parts of northern England affected by a spike in coronavirus cases, while she said those returning should minimise contact with people from outside their household for 14 days.

– Muslim leaders criticised the Government for the “shockingly short notice” of the new restrictions in parts of northern England, which were announced the night before the Islamic festival of Eid.

– Mr Johnson strengthened precautions by making face coverings mandatory in indoor settings such as museums, galleries, cinemas and places of worship from August 8.

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