The government may need to consider extending the furlough scheme and other support measures if its roadmap out of lockdown is knocked off course by rising Covid-19 infection rates.
This is according to the chief executive of UK Hospitality, who said that the reopening of hospitality venues last month had been “far from a Champagne moment” after a challenging year for the industry.
Concerns are growing over the Covid-19 variant first detected in India, which could hamper the government’s plans for a full reopening of the economy and the lifting of all restrictions on 21 June. Infection rates are rising in areas including Bolton, Bedford, Blackburn, Wigan, Hounslow and several other areas.
Writing in the Guardian, UK Hospitality chief executive Kate Nicholls said the chancellor Rishi Sunak should consider bringing forward a new financial support package and an extension to the furlough scheme if plans to remove restrictions next month are scrapped.
The furlough scheme is currently set to run until 30 September, at which point it would have supported jobs for 18 months.
“At this point, any delay to the removal of restrictions on 21 June will be nothing short of catastrophic for a sector that has already lost £80bn in sales – two-thirds of its pre-pandemic revenue – over the past year,” said Nicholls.
“Should there be one, it needs to be communicated well in advance and come with further support for a sector that employed 3.2 million people prior to Covid – the third largest private sector employer in the UK.
“Any delay means the decision to reintroduce business rate repayments for the sector from 1 July would have to be reversed and delayed until at least October. Commercial rent protections would need to be further extended – not to do so would certainly lead to evictions, job losses, business failures, and more boarded-up units blighting Britain’s high streets.
“The government would also need to look again at the future of the furlough scheme, as operators will not be in a position to contribute further if they are still trading under restrictions. This would inevitably result in large numbers of job being lost.”
The Mid Yorkshire Chamber of Commerce has also warned that any delays to the roadmap could threaten recovery in the region. It has seen an 8% increase in the number of vacancies advertised in the past quarter, but this progress could easily be hampered.
Managing director Martin Hathaway said: “Ongoing financial support from the government and the reopening of the economy has helped to drive employment and bring those who were furloughed back into work. We are optimistic about the increase in job vacancies as this points to an encouraging rise in demand for labour as the economy reopens.
“However, any delays to the planned roadmap, and subsequent full reopening of the economy, may see the current trajectory taking a dip, creating renewed job losses, particularly if government support doesn’t keep in line with the roadmap, allowing firms to fall behind once again.”
Managing director of First Recruitment, Andy Turner, said: “Certain sectors have been decimated by Covid-19 but many others have flourished creating job shortages in most other sectors. These shortages are threatening the country’s recovery.
“The extremely generous furloughing scheme is masking the real situation of which we won’t know the real effect until this scheme closes in September but before the virus hit us, we were (in effect) in full employment made worse with the net loss of lots of our Eastern European co-workers who have left probably never to return – although the figures don’t agree, I suspect we are approaching full employment once more at a rapid rate.”
The latest official figures from HM Revenue & Customs showed that the number of organisations using the furlough fell by 12,000 in February. The scheme supported 840,387 jobs that month.