Lancashire businesses urged to be prepared for the ending of the furlough scheme

Lancashire businesses have been warned to make sure they are ready for the ending of the furlough scheme at the end of this month as the withdrawal of Government support could lead to a range of pressures.

Tuesday, 7th September 2021, 3:30 pm

Chancellor Rishi Sunak extended the scheme, designed to support firms by paying a percentage of workers pay at home during the coronavirus restrictions, but has refused to consider a further extension even though the Resolution Foundation has estimated there are more than a million workers still on the scheme.

Many fear the ending will trigger a rise in unemployment and an existential threat to struggling businesses which have been relying on the help to keep going.

Now as the big cut-off approaches, county business group leaders have urged firms to prepare.

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Lancashire businesses are being urged to get ready for the end of the furlough scheme on September 30 as Chancellor Rishi Sunak has said there will be no further extensions

Babs Murphy, chief executive of the North and Western Lancashire Chamber of Commerce said: “Already, the UK’s Coronavirus Job Retention Scheme has seen more than eight million jobs furloughed over the last 18 months, with billions having been spent so far.

“For many employers, they will be in a position to welcome back staff to their previous roles and be able to pay 100 per cent per cent of their wages.

“Unfortunately, for other businesses, they will not have financially recovered sufficiently to be able to take all staff back from furlough leave and pay full wages.

“Clearly the furlough scheme has kept alive some ‘zombie’ jobs, and has only served to postpone the inevitable layoffs.

Paul Foster from the FSB

“This raises important questions over what comes next as employers’ willingness to bring people back onto their books will be put to the test.

“Should employers not wish to re-hire, the furlough scheme will merely prove to be a very expensive way of delaying unemployment.

“However, on a more optimistic note if the economy recovers quickly it may prove to be just the tonic that the labour market requires to get back onto a more solid footing.”

Paul Foster, FSB development manager, said: “With furlough now being wound up many small businesses which are still benefitting from the scheme are being pushed to make a decision on the futures of their staff.

Babs Murphy from the North and Western Lancashire Chamber of Commerce

"These are incredibly difficult decisions to make and businesses are rightly taking outside advice from organisations such as FSB on what their options are.

"There remains uncertainty amongst businesses as to what the future holds, even though businesses now operate without restrictions.

“For many businesses it is hard to predict what demand might be in the coming weeks and months, and of course keeping staff on can only be done where there is enough work to keep them busy and productive. Many businesses are thinking and operating for the ‘here and now’, reluctant to invest for the future when they are still very much in survival mode.

“In spite of the assistance many have had through furlough, bounceback loans and government grants, there remains a high level of debt in many businesses which have also had to borrow to survive for the 18 months when they couldn’t operate properly.”

Allan Cadman, North West chairman of insolvency and restructuring trade body R3

Allan Cadman, North West chairman of insolvency and restructuring trade body R3, is calling on company directors to use September to review their businesses and address any financial issues they are facing.

He said: “Directors have another 30 days where the Government will effectively underwrite a large percentage of their wage bill.

“They need to use this time to identify any financial issues their business may face and explore their options for resolving them.

“It’s very hard to admit your business is struggling, but starting the conversation as early as possible will mean you have more potential solutions open to you, and more time to make a decision about how to move forward.”

Allan said it was critical that directors were aware of signs of distress – such as difficulty paying wages, paying suppliers on time or problems with cashflow – and did not ignore them.

He added: “Solutions can often be as simple as refinancing or consolidating the company’s debt, but what’s really critical is that they explore the options before the issue spirals into something much more serious.”

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