At least 70% of firms in the UK have put their staff on furlough while they wait for the crucial money that will help save jobs. Within the first day of the government’s Coronavirus Job Retention Scheme going live, 185,000 employers submitted claims on behalf of 1.3 million staff, totalling £1.5bn.
A study by the British Chambers of Commerce (BCC) found that 71% of firms have now furloughed some of their workers – up from 66% on the previous week. Meanwhile, 30% of businesses say they have now furloughed between 75 and 100% of their workforce. The study was based on responses from 678 firms, 98% of which have less than 250 staff.
The scheme enables employers to apply to the government for help in covering 80% of staff wages of furloughed staff, up to a maximum of £2,500 per month.
Employers face cash crisis
A mounting cash crisis has also led to 59% of firms reporting that they have a maximum of three months of funds in reserve, according to the BCC.
The BCC’s Coronavirus Impact Tracker measures the impact the pandemic is having on businesses and the effectiveness of the government measures to support firms. The largest survey of its kind, it received 678 responses. Its latest round of polling took place between 15 and 17 April.
Almost a third of employers said they had furloughed at least three-quarters of their staff.
Funds released within a week
The government says it will release funds to within six working days. This means those firms who applied on the day the scheme went live (20 April), should expect to receive their furlough cash by 28 April. That only leaves a short time for firms facing financial difficulties to get the cash they need.
Chancellor Rishi Sunak last week announced that the government would be extending the scheme for another month following fears that thousands of workers would be made redundant; but the government is now urged to consider keeping the scheme in place for longer to help firms manage the transition period once lockdown ends.
So far, the coronavirus has resulted in 11 million people being furloughed or made unemployed, equivalent to a third of Britain’s workforce.
Concerns for employers
While there has been plenty of praise for the furlough scheme, it’s not escaped criticism. Despite being on the firm’s payroll by 19 March, if an employee’s real-time information (RTI) was not submitted to the HMRC they risk not being eligible for the scheme. There will also be some employers who will be caught out by holiday pay. While they will have to pay extra to employees taking a day’s holiday during furlough, if staff don’t take holiday during this time, they will have a considerable amount of annual leave left to take when they can finally get back to work.
The BCC does say they are reassured that the HMRC can handle the demand from firms. However, it emphasises that furlough payments must reach businesses as quickly and as smoothly as possible to protect jobs and livelihoods.
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