Jobs fears in Edinburgh's hospitality sector as Chancellor Rishi Sunak phases out furlough scheme

Employers will have to contribute more each month

Rishi Sunak announced the phased withdrawal at the daily briefing

CHANCELLOR Rishi Sunak has announced how the Government’s coronavirus furlough scheme will be phased out by the end of October, sparking warnings of major job losses.

The Job Retention Scheme, which pays 80 per cent of the wages - up to a maximum of £2,500 per month - of staff who are not working but are kept on the payroll, will continue unchanged through June and July.

But from August, employers will need to cover employer national insurance and pension contributions for furloughed staff.

In September, they will also be asked to pay 10 per cent of the salary guarantee.

And from October, the employer’s share of salary costs for furloughed staff will rise to 20 per cent before the scheme closes at the start of November.

A total of 8.4 million people are currently furloughed at an estimated cost of at least £10 billion a month.

Mr Sunak said the scheme was one of the most generous in the world but as the Covid restrictions began to be lifted it had to be adjusted.

However, unions and those in the hospitality industry were among those warning a wave of redundancies could follow.

The hospitality and tourism sector, one of the worst hit by the crisis and likely one of the last to reopen, had asked for a further extension.

Announcing the changes at the daily Downing Street briefing, Mr Sunak said employers would be able to begin bringing back staff on a part-time basis from July, a month earlier than previously announced.

And self-employed workers whose incomes have been hit by the coronavirus lockdown will be able to claim up to £6,570 extra support, the Chancellor said.

Mr Sunak said: “Our top priority has always been to support people, protect jobs and businesses through this crisis. The furlough and self-employment schemes have been a lifeline for millions of people and businesses.

“We stood behind Britain’s businesses and workers as we came into this crisis and we stand behind them as we come through the other side.

“Now, as we begin to re-open our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining amongst the most generous in the world.”

But research published by the Institute of Directors claimed that a quarter of employers using the furlough scheme would be unable to afford to make any contribution at all towards workers’ wages as the economic hit of the pandemic is felt.

And the GMB union warned workers must not be abandoned.

Acting general secretary John Phillips said: “The Chancellor’s furlough plans provide a valuable lifeline for business and workers - but people mustn’t be abandoned while the economy is still stuttering.

“In October lots of sectors – leisure, hospitality, aviation – may still be on their knees. Those workers can’t just be thrown to the wolves.

“People are still going to be very worried after today’s announcement; vulnerable workers whose lockdown could last beyond October, those reduced to less than the minimum wage while on furlough, the lack of PPE and unscrupulous employers using the JRS to pay for redundancies.

“We need to be clear - no one should be back at work unless the workplace is safe, that goes for the self-employed too.

“Now’s the time for employers to step up and keep their workers safe and above the breadline.

“Of course people want to get back to work, but safety has to be the top priority.”

The SNP warned restrictions in support for furloughed workers and the self-employed could push businesses to the brink, force people into further economic hardship, and cost countless jobs.

The party’s Westminster finance spokeswoman Alison Thewliss urged Rishi Sunak to rethink his plans and extend the schemes. And she said Scotland should continue to have access to the schemes for as long as is required.

Ms Thewliss said: “The changes announced by the Chancellor to the Job Retention Scheme and Self-Employment Income Support Scheme risks pushing businesses to the brink, forcing self-employed people further into hardship, and could cost countless jobs across the UK. Rather than restricting financial support for those impacted by the coronavirus pandemic, the Chancellor must strengthen support and fully extend the schemes for as long as is necessary to ensure a strong economic recovery.

“Workers and employers must not be penalised due to the pandemic. Moves to reduce financial assistance to businesses could end up sending unemployment soaring as they are forced to make mass redundancies or take on unmanageable debt.

“I urge the UK government not to undo the work that has been done so far to help businesses and workers through these challenging times, and to instead listen to concerns raised by firms and industry organisations who are calling for the strengthening and extension of support schemes.

“The Chancellor must also ensure that the devolved nations continue to have access to the furlough scheme for as long as is required to protect jobs and the economy, as well as clarifying what his plans on the furlough scheme will mean for sectors like tourism and hospitality, who were first out and will be last back.”

Job losses in Capital’s restaurants inevitable, say owners

REDUNDANCIES in the Capital’s hospitality sector are inevitable as the Job Retention Scheme is wound down.

Paul Brennan, co-owner of Dine restaurant above the Traverse, has 32 staff and expects he will have to lay off half of them.

He said phasing the withdrawal of support would not change the situation.

“I think regardless I’m looking at redundancies,” he said. “I don’t know how hospitality businesses, like restaurants, who in August will have been closed for five months, will be able to afford it. We all have running costs which we need to meet without any income. I don’t think there’s any way of getting away from the fact there will be redundancies.”

And Virginie Brouard, owner of both Le Di-Vin wine bar and La P’tite Folie restaurant at the West End, also said she would have to make some of her 26 staff redundant.

“It’s a good gesture to say at first you have to pay national insurance and pensions only, but even that would be £1,900 a month and I have no income.

“I want to keep my staff, but where am I going to find the money? I would have to use my own savings. We spoke to the staff and they completely understand I will not be able to pay 20 per cent. I have a good relationship with my staff but some of them will definitely be made redundant.”