Why September Could Bring a Raft of Redundancies
As much of the country continues its crawl back to normality, millions are getting back to business as usual. The vast majority of businesses have once again opened their doors, even if most of their employees are still working from home.
Behind the scenes, a major alteration to government policy is about to take place, which analysts believe could result in a raft of redundancies. At the end of September, the government’s furlough scheme will officially come to an end.
After 18 months, businesses across the UK will no longer be able to claim subsidies to pay the wages of staff on a temporary leave. At which point, they will be forced to decide whether to keep them on and foot the bill themselves, or make them redundant.
A Significant Shift in Employment Policy
To understand just how significant the withdrawal of the furlough scheme is likely to be, you need only consider how many people’s salaries are still being subsidised. At the end of June this year, there were still around 1.84 million people receiving furlough payments.
This would suggest that when the scheme is retired in a few weeks’ time, it will place many thousands of employees across the country in a difficult position.
Compounding the issue is the looming commencement of government-issued loan repayments for an equally extensive contingency of businesses. The government introduced two specific relief loans for businesses last year; the Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS) which allowed businesses to access emergency funds to remain afloat and defer repayment for one year.
As this 12-month grace period has now elapsed, businesses across the country are about to find themselves facing significantly elevated outgoings.
With no end to the ongoing economic uncertainty in sight, it is almost a given that businesses in huge numbers will be looking at major financial difficulties. Questions are now being asked as to just how severe the consequences will be, along with what the government needs to do to protect UK businesses from ruin.
Is an Extension on the Cards?
The only plausible solution is an extension to the furlough scheme. Or perhaps, a modification of existing scheme, as opposed to its outline withdrawal.
The way things stand right now; this does not seem like something the government is considering. Despite the prospect of another autumn and winter season spent on lockdown, little to nothing has been said about potential support measures for businesses.
In the event that the UK is once again plunged into lockdown, the government will have no choice but to support businesses affected by the restrictions. This is of course far from the preferred scenario for employers. Thousands of which were forced to close their doors permanently during the first lockdown.
Analysts are therefore predicting a turbulent closing quarter for the UK’s business community, shy of a prompt extension to the furlough scheme which seems unlikely at best.