A welcome move by the Chancellor, but productivity could be impacted through the new flexible furlough scheme

The Chancellor’s announcements on the Job Retention Scheme are welcomed and more generous than anticipated, but the flexible furlough could lead to higher Government costs and hit productivity. Read more: A welcome move by the Chancellor, but productivity could be impacted through the new flexible furlough scheme

A welcome move by the Chancellor, but productivity could be impacted through the new flexible furlough scheme

The Chancellor’s announcements on the Job Retention Scheme are welcomed and more generous than anticipated, but the flexible furlough could lead to higher Government costs and hit productivity.

Nimesh Shah, a partner at tax and advisory firm Blick Rothenberg said: “To take advantage of the flexible furlough scheme, businesses will need to furlough employees they want to include by 10 June so that they are eligible under the new scheme –  this could result in a wave of new registrants of workers which may not have otherwise been placed on furlough.”

He added: “The Government needs to be wary of more workers being placed on furlough, which will increase the cost of the scheme.  Also, there will be a natural hit on productivity if workers are being unnecessarily placed on furlough because businesses want to take advantage of the flexible furlough arrangements.”

Shah said: “The gradual phasing out of the furlough scheme between now and October gives businesses forward visibility and allows them start to plan for when the scheme closes.  From August, businesses will need to make a contribution equal to 5% of gross employment costs and this will increase to 23% in October.  It’s hoped that the economy will have re-opened sufficiently by August so that businesses can afford to cover the additional costs, but there are likely to be some causalities as the Government support eases.”

He added: “ However, the end of October is a hard deadline for businesses, and with so much uncertainty around the economy, some businesses will be left fearing the worst for when the Government money runs out.

“Businesses in tourism, leisure and hospitality are some of the hardest hit, and there is still no plan from the Government on when they will be able to re-open, and even then, it is unknown what the trading conditions will look like as people cautiously make their way to restaurants, bars and hotels. “

Shah concluded: “ The Government should consider the possibility of extending the scheme to this sector beyond October and plans should be drawn up now.”

“There is no doubt however that the Chancellor has been extremely generous again and should be applauded for the work that he has put in and this is particularly true in terms of the self-employed who will also receive a second grant worth 70% of a self-employed person’s average monthly trading profits for three months, capped at £6,570.”

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A welcome move by the Chancellor, but productivity could be impacted through the new flexible furlough scheme

Source : Business Matters More   

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UK lenders confirm support for commercial landlords

The banking and finance industry is today confirming its continued support for commercial landlord customers as part of its ongoing commitment to help business customers through these difficult times. Read more: UK lenders confirm support for commercial landlords

UK lenders confirm support for commercial landlords

The banking and finance industry is today confirming its continued support for commercial landlord customers as part of its ongoing commitment to help business customers through these difficult times.

With the June/July rent quarter soon approaching, lenders recognise that commercial landlords and their tenants may have concerns about their ability to make their payments.

Banks and finance providers are committed to supporting viable businesses and are engaging with their landlord customers ahead of the next quarter day. The flexible support available includes providing capital payment holidays and amending current facilities.

Stephen Jones, Chief Executive of UK Finance, said: “Commercial finance providers are working hard to support business customers through these difficult times and lenders recognise that the current situation poses particular challenges for commercial landlords and their tenants.

“A wide range of flexible support is available, including amendments to facilities and capital payment holidays to help landlords and their tenants manage through the disruption.

“As part of the support being provided ahead of the June quarter day all the main commercial lenders are proactively contacting their major commercial landlord borrowers to identify concerns they have and provide support where appropriate.”

Those commercial landlords who are concerned about making loan repayments or require financial assistance during this time and who have not yet been in contact with their lenders should do so through the usual channels.

Banks and finance providers will treat customers sympathetically and will consider their circumstances on a case-by-case basis.

Today’s announcement is part of the industry support for businesses impacted by Covid-19, which includes making available new and extending existing finance, restructuring facilities, providing capital payment holidays and covenant waivers.

Figures published this week show that £27.5 billion of lending has been provided to over 650,000 businesses through the three government-backed loan schemes so far with an additional £20.5 billion extended via the CCFF commercial paper programme at the Bank of England facilitated by commercial paper programme arrangers across the banking sector.

Read more:
UK lenders confirm support for commercial landlords

Source : Business Matters More   

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