Chancellor expected to announce further JRS extension

By James McAllister

- Last updated on GMT

Chancellor expected to announce Coronavirus Job Retention Scheme extension

Related tags: Coronavirus, Job Retention Scheme, Restaurant, Hospitality

Chancellor Rishi Sunak is to reveal the future of the Government’s Coronavirus Job Retention Scheme (JRS) later today (12 May), with some reports suggesting he may extend it from June to September.

It is, however, also believed that he plans to cut the percentage of earnings covered under the scheme from 80% to 60%, but that will pledge to continue to top up the wage packets of laid off staff if they return to work part-time.

In its current form the JRS, which was first announced in March, allows employers to claim for a cash grant of up to 80% of a furloughed employee's wages, capped at £2,500 a month. 

Initially the scheme was scheduled to be open for three months; backdated from the 1 March, and lasting until the end of May. 

It has since been extended to run until the end of June, and the Chancellor has faced mounting pressure in recent days to prolong it further or risk mass redundancies across various sectors, including hospitality. 

According to the Hospitality Leaders Poll launched last week by William Reed’s specialist insight division HIM/MCA Insight, an extension of the JRS is seen by many in the sector as being critical for survival​.

The poll results show that 99% of founders and board level executives at multi-site restaurant and food-to-go operators rank it as very, or extremely important to staying in business; while some 94% of independent restaurant owners ranked an extension to the JRS as somewhat, very, or extremely important to staying in business as a result of the Coronavirus pandemic.

It is currently estimated that around 2.4 million people are currently on furlough in the broader hospitality sector.

In recent weeks there have been various calls made, both within and outside the industry, for the Chancellor to extend and amend the JRS specifically for hospitality businesses, to help as they attempt to recover in the months ahead.

Yesterday (11 May), trade body UKHospitality wrote to the Chancellor calling for continued support through the JRS.

This includes the continuation of the 80% furlough pay until the end of September, with a ‘tapered scheme’ in place until the end of the year; and sector-specific part-furlough schemes, with pay shared between the Government and the employer.

“The introduction of the furlough scheme has been a crucial lifeline for many businesses and employees,” says UKHospitality Chief Executive Kate Nicholls.

“It has helped hospitality overcome the initial crisis, saved businesses and kept jobs open. As the Government, and businesses, begin to think about reopening, it is vital that furlough support continues. Abruptly turning it off would be a disaster and undo the good work that the Government has already done.

“When lockdown lifts, a substantial number of hospitality businesses will be unable to reopen again and many of those that can will still be operating far under normal capacity. Confidence among businesses for the rest of the year with even best-case scenario predictions pointing to a huge drop in trading. Without continued support through the furlough scheme businesses will fail and people will lose their jobs.”

London Union’s Jonathan Downey, who has been a leading voice for the industry throughout the Coronavirus crisis, has previously suggested the Government could extend the JRS for hospitality and leisure businesses until the end of the year​, but covering a reduced percentage of an employee’s wage. 

In July and August it could cover 60%; in September and October, 40%; and in November and December, 20%. 

“It’s clear that more and more hospitality employees will be going back to work soon; especially those working in takeaways, grab and go, fast casual, and QSR,” he said earlier this month. 

“But for many others it will be many months before there is any possibility of a profitable reopening. “The issue we need to contend with is the cost of the JRS, and how long can the taxpayer sustain it.

Related topics: Business & Legislation

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