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The Chancellor has announced an extension to the furlough scheme for businesses hardest hit by the latest Covid-19 restrictions. This new support seems to be a part of the Government’s ongoing “one-size-fits-all” approach.

The Chancellor announced that any business temporarily shut down nationwide as a result of coronavirus curbs would get taxpayer support to fund up to 67% (up to a maximum of £2,100 a month) of their staff’s wages. The move comes just weeks after he announced his Winter Economic Plan.

The Winter Economic Plan announced by the Chancellor a couple of weeks ago was extremely general and I think the Government has wasted a significant proportion of £9bn on the furlough bonus scheme, because it’s going to go to businesses that don’t necessarily need it.

Whilst this one-size-fits-all measure worked in the spring, the Government could be a bit smarter in how they allocate support now. There are some businesses that have flourished in the current situation and have certainly managed to keep going. However, there are also some sectors that have been absolutely decimated and the mix is badly skewed.

Communication

The Governments communication needs to be much clearer. Initially Sunak was opposed to extending the furlough scheme but suddenly the goalposts have been moved again, so there has been a complete lack of consistency and clarity.

Many businesses have put a lot of time and effort and invested money into getting the office and the environment Covid-19 secure. (I know a lot of my hospitality clients have done the same.) You almost feel as if that has been wasted, as if we have been led down a path that we thought was the right way and then suddenly it’s a dead end.

Hospitality

It is also massively unfair that the hospitality sector is being blamed. My hospitality clients were all gearing up to start again after being actively encouraged to open up with the Eat Out to Help Out Scheme. 

They have all come up with clever ways of working – from apps to order at your table, to putting up screens and moving things around to ensure social distancing. A lot of clients have taken the opportunity to revamp their offering and look to how they could operate differently. If that’s an area that the Government feels it needs to focus on then fine, but they should be offering additional support to restaurants, bars and nightclubs specifically.

I have a nightclub client that is very much focused on students and whilst the 10pm curfew was in place, they were just about covering costs, they weren’t making any money, but at least they were able to pay staff and contributing. Further restrictions mean they are just not going to be viable. I also have a live events client and that again is a sector that has been affected. Other clients, particularly those in the home improvements sector are absolutely flying.

Targeted support

The Government assistance going forward very much needs to be targeted by sector and geographical location. The North of England particularly faces an anxious wait to see the full impact. With the advice our local councils and Mayors receive, surely they should be the ones who are making the decisions instead of this one-size-fits-all approach?”

 

Are you unclear on any COVID-19 related issues that your business is facing? Get in touch and we will be happy to assist you

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About the author

David Fort

David specialises in advising expanding owner-managed businesses and offering bespoke services to company directors as their businesses develop, particularly in areas of wealth creation and asset protection. Having worked as an FD for a company that grew very rapidly, David also has practical experience.  David deals with companies starting up to those that are well established and who may just need a guiding hand with strategic and operational matters.

2 responses to “Chancellor’s furlough scheme announcement; one-size-fits-all?”

  1. Colin

    David
    Good words . The virus is going to here for the foreseeable future and the blanket approach is not the way forward. The issue is the cost v the fact are we simply delaying lay-off scenarios

    Reply
    • David Fort

      Hi Colin , A lot of our clients have adjusted to the Covid world and are managing to continue trading ( and some even growing ) , but there are successful businesses that through no fault of their own could go out of business , and they are the ones who need the targeted support

      Reply

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