West Midlands leaders have today called on Chancellor, Rishi Sunak, to make the furlough scheme more flexible in the months ahead so it can better protect the livelihoods of hundreds of thousands of workers across the region.

With sectors such as hospitality, tourism and leisure potentially facing further months in lockdown, fears are growing over the long-term security of many jobs in those industries.

A meeting of the West Midlands Covid-19 Economic Impact Group was told by business leaders last Thursday, that take-up of the Government’s Job Retention Scheme had been strong in the West Midlands and had been successful in safeguarding jobs and heading off widescale redundancies.

But the unprecedented scheme, which sees the Government pay 80 per cent of furloughed workers’ wages up to £2,500 a month, is set to finish in its current form at the end of July.

Although the Chancellor announced last week that the Coronavirus Job Retention Scheme would be extended from the start of August to the end of October, he said employers would need to “share with the government the cost of paying salaries”. The EIG, which brings together business leaders, central government, banks, trade unions, and local authorities including the West Midlands Combined Authority, has now written to the Chancellor welcoming the scheme’s extension but calling for it to be more flexible.

The region has also warned that the CJRS may be too blunt a tool to differentiate by jobs or sectors and there may be a role for further financial support for hospitality, tourism and leisure businesses. Mayor of the West Midlands Andy Street, who chairs the EIG, said:

“The furloughing scheme has been a lifeline for thousands of businesses and it has undoubtedly saved many West Midlands workers from redundancy.

“The extension is extremely welcome and will help provide certainty for businesses and employees, helping to underpin confidence and long-term planning in what are exceptionally challenging circumstances.

“But it’s vital the scheme becomes more flexible to allow part-time work under furlough and a shortening of the minimum three-week furlough period.

“Account must also be taken of the ability of businesses to shoulder the costs. Even as lockdown is eased, restrictions on business operations in certain sectors means there is a case for sector-specific support and especially for the hospitality, tourism and leisure sectors.”  

The EIG has also urged the Chancellor to carefully consider the cashflow implications of the scheme, warning that companies may be put off from recalling staff if they do not have the money to pay wages. The EIG said all effort needed to be made to provide firms with the ability to plan their cashflow.

The Government is currently paying the wages of more than seven million UK workers. Based on those figures, it is believed that as many as 400,000 workers in the West Midlands are on furlough. It is thought the scheme is costing the Government around £14 billion a month.

The West Midlands’ civic, business and trade union leaders have committed to drive a ‘bounce forward’ to a more inclusive, environmentally sustainable economy. Work has already begun on ten vital economic goals, mixing actions that can manage economic harm with those that drive ambitious long-term growth.