From 1st July, all employers, including sports and social club owners, will now have to contribute to the cost of keeping staff on furlough.
The scheme, which has been active since March of 2020, has cost the nation an approximate £66 billion so far. The government would pay a proportion of the wages for staff who could not work due to lockdown and government restrictions. This grant from the government extends to all businesses on the UK payroll and to any worker on any type of contract, including full-time, part-time, agency, flexible or zero-hour contracts.
However, after over 16 months of furlough, the government has changed the terms. It’s worrying news for businesses who have been unable to open fully over the course of the year and are still not at full capacity – having sustained serious losses and now needing to pay an extra expense:
What are the furlough rule changes?
On July 1st new rules state the government will pay 70% of furloughed worker’s salaries and employers will pay a mandatory 10%.
The mandatory employer contribution will then rise to 20% in August and September, the government dropping down to 60%. It has been critical for employers to understand the exact dates for the changes. Furlough has been extended four times already, but Boris Johnson and Chancellor Rishi Sunak both said recently that they do not want to extend furlough again. Yet history would suggest that if a large new wave of infections leads to another lockdown, the government will reconsider.
A different Job Support Scheme (JSS) was due to start on 1st November 2020, but this has been postponed indefinitely.
According to the statistics, over 77 thousand employees of sports facilities are still on furlough:
What’s the employers’ and MPs’ opinions on the funding reduction?
Terry George, owner of a Leeds club, told the BBC he expected some of his staff would be made redundant as a result of the changes.
“We can’t afford to pay people out of a pot that has no money coming in,” he told the BBC’s Today programme. “We’re going to have to lose some staff.”
Bridget Phillipson MP said that over 400,000 businesses are being hit with new border rates and furlough costs:
Shadow School’s Minister, Peter Kyle spoke to Sky News on July 1st and said we can’t have people laid off work because the law stops them from going to work. He said the changes were wrong and unethical and exceptions should be made for locations that are unable to open:
Daniel Tomlinson, senior economist at the think tank, speaking to the Times, said that 2.4 million still on the scheme, with the figures “offering a sobering reminder of just how incomplete our COVID recovery is.”
Where as Alex Proud, founder of Proud Cabaret, spoke as part of the #WeAreNightlife campaign on the need for reopening. He’s been a fairly outspoken critic on how the government handled lockdown and is more frustrated than most on being forced to close without sufficient funding. He feels hospitality has been unfairly treated, and these new changes reinforce that feeling even further.
Tristan Moffat, manager of Piano Works, also spoke as part of the #WeAreNightlife campaign, and reiterated that there is a need for support. He explains how there has been no cash put into the business in 15 months. And so taking away funding rather than providing it when venues need it most – and Freedom Day being still weeks away – it’s not helpful for struggling venues which need a strong reopening.