26 Mar 2020
Another new word entered the business lexicon last Friday and brought with it a substantial measure of relief.
Not many companies would have used ‘furlough’ as a description of their staffing decisions but for many the Chancellor’s announcement of the Job Retention Scheme will now be dominating their planning and helping to reverse reluctant decisions to lay off employees.
Up until that point, sheer desperation was settling amongst owners and managers of businesses, large and small, across the country. With demand disappearing by the day and often in the space of one social distancing decision, firms often had no choice but to shut the business down.
Now many companies can decide to retain the staff they would otherwise have had to make redundant by putting them on furlough, knowing that 80% of their wages up to a monthly cap of £2,500 will be paid for by the Government.
The UK and Scottish Governments are taking necessary decisions to protect our health and are deliberately putting the economy on pause. I know from conversations with dozens of the Chamber’s members that the Job Retention Scheme was the moment when the UK Government demonstrated they get it, that the economic impact of the essential measures to enforce social distancing was beyond any individual company’s ability to handle.
Occasional bad examples like the Coylumbridge Hotel are not remotely reflective of the lengths to which most business owners and managers want to go to protect their staff. Precious few would ever choose to lay off their teams at short notice unless they had run out of options. The Job Retention Scheme appeared just in the nick of time.
Amongst the most encouraging lessons from last week’s announcement was how open the UK Government has been to views and suggestions from business membership groups. I know just how much Adam Marshall, Director General of the British Chambers of Commerce, was doing in direct meetings with senior Cabinet ministers, civil servants and other business bodies to convey the seriousness of the situation and offer options for a response.
Throughout he has been listening intently to reports coming in from Glasgow Chamber and dozens of our counterparts. Thankfully, the Chancellor made it abundantly clear he would do what was necessary at whatever scale to stop countless businesses going to the wall.
Otherwise today hundreds of thousands of people would be freshly unemployed.
With the Job Retention Scheme in place and, at the time of writing, a similar response coming for the self-employed there is now scope for businesses to do more careful recovery planning.
Rates relief, deferment of VAT and the Business Interruption Loan Scheme which began on Monday are helpful measures and although I suspect there will be many other issues for companies to deal with, such as the pausing of payments on business loans or property rentals, there is at least the outline of a route ahead.
Of course, the extraordinary speed with which the Chancellor made his interventions now must be matched by similar speed in their implementation. I don’t underestimate the scale of that task. Banks are being asked to handle a vastly expanded and radically adjusted loan guarantee scheme with a pipeline of demand they will rarely, if ever, have experienced before. But at least the principle of a Government-backed loan guarantee scheme is not in itself new.
HMRC has an even greater task administering the Jobs Retention Scheme. It will be delivering a measure that is completely new and with companies desperate to see the cash in days rather than weeks.
We stand ready to help as much as we can.
This article first appeared in Glasgow Chamber’s Herald weekly column.