Government urged to 'delay changes' to furlough pay to help Shropshire businesses
The government has been urged to delay its wind-down of the furlough scheme, as businesses face the impact of a delayed "freedom day" and the spread of the Delta variant.
Thousands fewer workers in the county remained on furlough in May, according to the latest figures from the government, but as of July 1 employers have to pay 10 per cent of the salary for furloughed staff – rising to 20 per cent in August and September, when the support scheme ends.
There are fears many businesses will not be able to afford the cost, with parts of the economy still restricted by Covid measures.
Richard Sheehan, chief executive of the Shropshire Chamber of Commerce, said that the changing circumstances of the postponed lifting of restrictions, and the recent impact of a rise in variant cases, were cause for a government re-think.
He said: "Nobody anticipated the growth in the new variant when the decision was taken to bring furlough to an end.
"I understand it is a costly situation but there are still tens of thousands on furlough and while business is picking up, there are many sectors finding it a real challenge because bills have to be paid, wages have to be paid, many have loans they have to start paying back, so the feedback from our members is in most cases this is too early and the government needs to react to the circumstances we are facing to allow business to get to a stage where they are fully up and running, and in a situation where they are generating enough income to be sustainable."
The latest figures from HM Revenue and Customs show thousands of workers were still furloughed in the county in May – 9,800 in Shropshire, 5,300 in Telford & Wrekin, and 3,900 in Powys.
The Shropshire number had fallen by 4,700 from 14,500 furloughed at the end of April.
In Telford it was 1,800 fewer than the 7,500 at the end of April, while in Powys it was 2,200 down on 7,500.
The reduction coincided with an easing of restrictions which led to the reopening of indoor entertainment and hospitality, along with holiday accommodation.
Across the UK, the total number of jobs furloughed fell by 1.2 million during May to 2.4 million at the end of the month, the figures show.
The furlough scheme, formally called the Coronavirus Job Retention Scheme, started with the Government paying 80 per cent of a worker’s wages, up to £2,500 per month, if they were not able to work due to the impact of the pandemic.
Employers could choose whether to make up the rest of staff salaries.
The reduction in Government support to 70 per cent with firms now required to pay 10 per cent of furloughed staff salaries will cost businesses £322 in July to keep an employee earning £20,000 a year on the books, according to the Institute of Fiscal Studies.
That could be too much for some businesses, say politicians and business groups.
British Chambers of Commerce director general Shevaun Haviland said: “The taper of government payments into the furlough scheme should be immediately deferred until we take the final step in the road map, and further grant support should be extended to the worst affected businesses.”
The Government has spent £66 billion on the furlough scheme since it started in March last year.
A spokesperson said: "We deliberately went long with our support to provide certainty to people and businesses over the summer, and that support, which is a substantial amount of funding, is continuing."
They added additional support was being given to businesses through grants, business rates relief and a cut in VAT.
