Coronavirus: licensed trade must be open for furlough changes to work

Current plan to taper off furlough scheme “simply not feasible” for premises closed since March

ALL of the UK’s pubs and bars must be allowed to reopen in order for changes to the Coronavirus Job Retention Scheme to work, say business and consumer groups.

Chancellor Rishi Sunak announced on Friday (May 29) that, from August, the UK Government’s furlough scheme will begin to be tapered off.

In August the UK Government will continue to pay 80% of the wages of furloughed staff, up to £2500, but businesses will be required to pay National Insurance and pension contributions. From September the government will pay 70% of wages, up to £2187.50 per employee,  with businesses required to pay 10% of wages as well as National Insurance and pension contributions.

In October, the government will reduce its contribution again, paying 60% of wages up to £1875, with employers required to pay 20% of wages as well as National Insurance and pension contributions.

From July, businesses will be able to bring furloughed employees back part-time, paying staff for the part-time hours they work while the Job Retention Scheme will pay for the hours they are not working.

The British Beer & Pub Association (BBPA) said that, in order for the tapering of the scheme to work, all of the countries pubs must be open and “operating viably”.

“Pubs have been closed since March with no income coming in,” said BBPA chief executive, Emma McClarkin.

“Expecting them to contribute to furlough costs if they are closed or operationally unviable is simply not feasible.

“We continue to work closely with government to ensure all UK pubs can open as soon as possible. Preventing pubs from re-opening as the furlough support reduces means that those pubs will have no income to cover the additional staff costs – risking job losses and pubs staying closed for good.”

McClarkin added that many pubs will not be able to reopen with social distancing in place – even if the World Health Organisation’s one-meter recommendation is adopted – and so those pubs “need the furlough scheme to continue at the current 80% until they can reopen”.

CAMRA, the Campaign for Real Ale, called on the UK Government to introduce a more flexible furlough scheme for pubs and bars.

CAMRA chief executive, Tom Stainer, said many pubs “just won’t be able to pay towards wages, National Insurance and pension contributions on top of existing costs and during periods of reduced trade due to social distancing measures reducing capacity”.

 “Those smaller pubs that are unsuitable for social distancing, as well as those in Northern Ireland, Scotland and Wales that might not be able to re-open until much later in the year, won’t have any income at all to pay these extra staff costs,” said Stainer.

“This will leave pubs with an impossible choice between taking on more debt, letting staff go, or calling it a day and closing down their businesses for good.

“The government should look again at this announcement and consider applying a flexible furlough arrangement for pubs until later in the year, helping them survive restricted re-openings. Otherwise I fear we will see many jobs lost and pubs not being able to survive and having to close for good.”

Both UK Hospitality and the Federation of Small Businesses (FSB) called for further support for the hospitality industry as businesses resume trading.

UK Hospitality chief executive, Kate Nicholls, said: “The government still needs to recognise that these costs will be difficult for hospitality businesses to bear, and consider other measures to support the sector. This must include brokering a solution on rents, with Treasury contributions if necessary, and considering further grants to support businesses to reopen.

“If we can find a solution on rents and get an extension of the grant scheme, this will mitigate much of the impact of the reduced furlough.

“If we do not, a very difficult spring would become a disastrous summer for hospitality.”

And the FSB’s Scotland policy chair, Andrew McRae, said there are “certain sectors for whom a return to any sort of revenue generation remains some way off – such as those in and reliant upon Scotland’s visitor economy”.

“Depending on how things progress over the summer, we might need to look at longer-term support for those particular parts of the economy,” said McRae.