North-east business leaders have given the extension of the UK Government’s furlough scheme a cautious welcome.
Chancellor Rishi Sunak announced yesterday that the job subsidy scheme, which has helped pay the wages of more than a quarter of UK workers since March, will now be extended until October.
Although Mr Sunak said the initiative would only continue in its current form until the end of July.
Changes, due to be confirmed later this month, would be introduced in July to allow “more flexibility” from August, which is expected to involve businesses paying a greater share of wages to staff.
Companies currently using the programme will be able to bring furloughed employees back part-time.
The announcement ended fears that the financial support would be cut off in a cliff-edge way which would trigger mass redundancies.
But while the four-month extension was widely welcomed as a way to provide more security for local firms and employees, one north-east business leader said the “devil would be in the detail” due to be outlined later this month.
Derek Ritchie, business improvement district manager at We Are Inverurie Limited, said the extension would “buy more time” for businesses and their staff.
But he raised fears over the possibility of sharing some of the costs with the government and wants more details.
Mr Ritchie said: “The announcement will in general be welcomed by employers and employees, it will buy the majority of workers a bit more time.
“The extension will give employers and employees a bit of security.
“For employers who have still got rents and other costs to pay for with no income, there still will be a worry that the longer this goes on the more chance of them going under.
“There are concerns on the plan to ask employers to share the cost of the scheme from August but the devil will be in the detail, which is not due to be outlined until the end of this month.
“It also still has to be made clear whether or not the UK government will continue to fund the scheme if workers in Scotland are asked to stay at home longer than in England, something which does seem like a real possibility.”
New figures show that the scheme has now helped support about 7.5 million workers, close to 30% of the UK workforce, and one million businesses.
Under the system, workers who are “furloughed” remain employed even though they are not working, with the UK Government paying 80% of their salary up to £2,500 each month.
Mr Sunak said his plans would give “flexibility to businesses while protecting the livelihoods of the British people and our future economic prospects”.
However, the chancellor dodged questions on whether he would deliver any specific support measures to help the North Sea oil and gas sector, or whether Scotland could continue furloughing workers beyond October if it imposed a longer lockdown.
SNP Economy Secretary Fiona Hyslop welcomed the extension, but said she would be seeking “more clarity” from UK ministers on a range of issues in the coming days.
Alexander Burnett, Aberdeenshire West MSP and Scottish Conservative shadow finance minister, welcomed the extension.
He said: “The furlough scheme and this further commitment shows how massive the support has been from the UK Government.
“It also highlights the four-nation approach is working and is helping to keep people in employment during this extremely unsettling time.
“Analysis has shown the early scheme has saved 374,000 jobs in Scotland with a huge emphasis on industries across the north-east.
“This fresh announcement from Rishi Sunak continues to go above and beyond to ensure sectors in the north-east can start to ease people back into work safely.
“It also shows there will be no cliff edge to the Coronavirus Job Retention Scheme which is positive news for everyone across the region and the rest of the UK.”
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However Aberdeen Central Kevin Stewart MSP is not so sure it should be welcomed with open arms.
He said: “The UK Government has now put the onus on employers to stump up more cash towards the scheme and I fear that many, many people may be forced back to work in unsafe conditions or face redundancy.
“What we need is the UK Government to fully extend the furlough scheme as it is just now to ensure that workers are fully protected and not forced back to work sooner than it is safe to do so.”
Aberdeen Inspired chief executive Adrian Watson said the announcement will come as a relief to many, but acknowledges it is not sustainable in the long term.
He added: “We welcome the Chancellor’s decision to extend the current structure of the scheme for a further month to include July and look forward to seeing the finer detail on what it looks like in moving forward from there.
“Of course, the ideal scenario is to get people back to work in Aberdeen and further afield as soon as it is safe to do so and this will be helped by us all abiding by the current guidelines.”
And Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce said the organisation was pleased the government was continuing to listen to the voice of the business community.
He said: “The Chancellor has given the visibility that we said firms need in order to be able to properly plan for the medium term. We now know that the CJRS will continue in its existing form until the end of July and the Chamber network will work with the UK Government to shape an adjusted and more flexible scheme to cover August-October reflecting what will be a phased recovery.
“Demand and order books are not simply going to go in a single step from where they are today to where they were before, so it’s encouraging to see our ask that from August employees can be part-furloughed on reduced hours, ultimately reducing the cost of the scheme for the taxpayer will be included.
“And we will continue to promote the idea of employers investing in training furloughed staff enabling them to add new skills and bring added productivity as they return to the workforce.”
Cabinet Secretary for Economy, Fair Work and Culture Fiona Hyslop said: “The scheme is playing an important role in maintaining employment and income, so I welcome today’s announcement of an extension until the end of October.
“I am particularly pleased that from August flexibility will be introduced enabling people to return to work part-time, without being penalised financially, as businesses transition out of the lockdown and adapt to new operating conditions which are likely to require the maintenance of physical distancing and other public health measures.
“However, more clarity is required on the details of today’s announcement. In particular, what employers will be asked to contribute to the costs of the scheme, how any changes will relate to guidance on safer workplaces in each of the four nations, how workers in isolation will be supported and what additional support might be provided to industries, such as tourism and hospitality, facing specific difficulties.”