The FTA is calling for “urgent clarity” on how quickly furlough payments will be made once the government scheme launches at the end of this month, warning that firms furloughing workers are “fast running out of cash” as the COVID-19 pandemic continues.
Under the scheme, companies adversely affected by the pandemic can reclaim up to 80% of an employee’s usual monthly wage, up to £2,500 per month, plus employer national insurance contributions and minimum employer pension contributions.
The FTA estimates that if the scale of furloughing in the logistics sector is repeated across other large industries such as manufacturing, retail and financial services, the cost to the government could be as much as £20bn per month.
In a letter to Chancellor of the Exchequer Rishi Sunak and business Secretary Alok Sharma, FTA chief executive David Wells said: “That is a massive undertaking, and given that the scheme does not go live until the end of April, how soon will cash-strapped businesses receive any payments?
“Nationwide, companies that are taking the government at its word and furloughing workers instead of laying them off are fast running out of cash as the economy grinds to a halt.
Read more
- “Ease furlough rules so drivers can deliver PPE,” RHA urges government
- “Furlough scheme a welcome lifeline but our volumes are through the roof,” insists ABE MD
- Giving staff leave on 80% of salary won’t work for haulage sector, critics claim
“It’s critical that businesses know when the payments from the furloughing programme will be received, and that these payments are made as soon as possible after the scheme opens at the end of April.”
Pointing out that firms have been “bankrolling” the scheme without any visibility of repayment, since the beginning of March, Wells added: “It is vital that our members can be confident that the government’s systems and processes can cope with the scale of likely demand. If they can’t, it will add further delay to the provision of vital cash to struggling businesses.
“FTA has already heard of several organisations that are not paying their furloughed staff until the cash from the scheme is received – a decision which will have a massive impact on workers.”
Wells said that while the FTA supports changes to the government’s Coronavirus Business Interruption Loan Scheme (CBILS), which could be used the bridge the cash flow gap, he warned that the banks “need to step up and deliver the cash quickly where it’s needed.”
He added: “Up until now the scheme hasn’t been working and the loans were not getting through. This is putting even more pressure on finances and causing more businesses to fail every day.
“Having encouraged businesses not to make staff redundant during this crisis, and use furloughing instead, it is now imperative that government can reassure industry by declaring when payments will be made, and give assurance that participation will not be restricted by further conditions and clauses when the scheme launches.”
