Coronavirus job retention scheme to cost £40bn

posted by 2 years ago in Covid-19

Yesterday the government announced a total of 55,242 infections and a further 854 deaths, making yesterday the deadliest day since the outbreak began. However, the number of new cases has fallen to its lowest level this month. The Chief Scientific Adviser Patrick Vallance has described the latest increase in cases as fairly steady, which could indicate that the strict lockdown measures are beginning to have an impact.

Although there is not an acceleration in the number of cases, it is still to early to tell whether the country has reached its peak of the outbreak. The Chief Medical Officer, Chris Whitty, has explained that once the government is confident the UK is over the peak of the pandemic, a serious discussion about ending the lockdown will begin.

Despite the shocking figures, people across the country were keen to show their support for the government, with millions of people ‘clapping for Boris’ as he continues to battle the virus in hospital. The foreign secretary, Dominic Raab, delivered a reassuring briefing yesterday, where he explained that the prime minister was not placed on a ventilator and did not have pneumonia. Mr Raab who is currently deputising for the prime minister stressed that any major decisions will be made collective within the cabinet.

Job retention scheme to cost up to £40bn

According to the British Chambers of Commerce (BCC) the job retention scheme could cost up to three times the initial estimates, at a cost of £30-40bn. The original estimates by the treasury were based on a 10% take-up, however the figures show many more are planning to use the scheme to furlough their employees. According to the BCC, 20% of smaller firms are planning to furlough their entire workforce, with 50% of businesses enrolling the majority of their staff on the scheme.

The scheme has been praised by many companies which have been forced to temporarily close, as 80% of employee’s wages can be paid via a grant from the government. Estimates by the Resolution Foundation show that a third of employees in the private sector could be furloughed, which equates to between 8-11 million at a cost of up to £40bn.

It is feared that the shutdown could continue beyond the end of May, when the current furlough payment scheme is due to end. However, the economic and social costs would be far greater if payments stop at the end of May, potentially causing mass unemployment.

Several industries feeling the strain

As the pandemic continues, several industries are feeling significant strain. The aviation industry was one of the first to call for a government bailout when travel restrictions were imposed, however so far, their petitions have been denied financial assistance. Another form of transport which is struggling is road haulage, an industry which is relied upon to move essential goods from warehouses to shops. However, the closure of non-essential shops has led to significant financial issues.

As springtime arrives, normally garden centres and other horticultural businesses enter their busiest time of the year. However, with shops closed plants are left unsold, with the Horticultural Trades Association (HTA) estimating a third could go bust. This news is echoed by the charity sector, with charity shops Oxfam and Age UK already furloughing 70% of their staff.

If your business is struggling during this crisis, we can help you find competitive forms of finance. As a broker we have partnered with both traditional and alternative lenders, to help you quickly compare everything from loans to bank accounts and overdrafts. To find out more about how we can help you find the best deals, please contact our team today.