Labour warns blanket furlough withdrawal risks permanent pub closures

As a result the party is calling for furlough support to be extended and targeted at the industries still under threat, and for business grants underspend to be redeployed as part of a 'Hospitality and High Street Fightback Fund'.

The JRS, which was announced at the onset of the UK-wide lockdown back in March, originally allowed employers to claim 80% of an employee's wages up to £2,500 from the Government. 

However, as the economy has begun to unlock over the summer, the levels of support have slowly been withdrawn by the Treasury.

In August employers were required to begin paying employer National Insurance Contributions and pension contributions for furloughed hours themselves; and from this month they have also had to pay 10% contribution to every furloughed worker's wage. 

During October that will rise to 20%, with the scheme closing permanently at the end of the month. 

However, Labour has said that a blanket withdrawal of the furlough scheme at the end of October will leave many pubs and bars at risk of closure, accelerating job losses and damaging high streets and night life across the country.

The warnings come after new analysis by the Labour Party revealed that more than 5,500 pubs and bars have closed in the UK since the Tories entered government in 2010.

“Pubs are a vital part of our high streets and social fabric in communities up and down the country," says Lucy Powell, Shadow Minister for Business and Consumers.

"They have been hard hit by the pandemic and Tory indifference and incompetence over many years means that many have gone to the wall.

“Ministers’ blanket approach to ending the furlough further threatens the future of many more. The furlough scheme must be extended for hard hit sectors to save jobs now, and a Hospitality and High Street fund so local areas can target support at businesses still in distress.”

In August, a survey carried out by the British Beer and Pub Association (BBPA) warned more than one third of pubs (37%) could not break even in their first month of reopening​​, whilst one in four pub and breweries didn’t think their business was sustainable past March 2021.

At the time, BBPA chief executive Emma McClarkin said a 'sector specific extension' of the JRS would be greatly welcomed.

Responding to Labour's comments, a Treasury spokesperson said: “We have stood by pubs and the communities they serve throughout the pandemic, providing targeted support for the sector including business rates holidays and cash grants of up to £25,000.

“The coronavirus job retention scheme will have been open for eight months from start to finish – with the government helping to pay the wages of over 9.6 million jobs so far. And support doesn’t end in October with the furlough bonus paying £1,000 per employee for those brought back to work and kept in employment into 2021.”