The government’s furlough scheme has opened for applications, with business groups warning that delays in payments could be catastrophic for British companies.
Through the Job Retention Scheme, employers can claim for a cash grant to cover up to 80% of their staff’s wages – capped at £2,500 a month.
HMRC has set up a new online portal which opened at 7am this morning, and the Treasury says funds to pay workers will land in a company’s bank account within six working days.
Although the government has received praise for its plans to mitigate the economic fallout of the coronavirus, it is being warned that firms need support quickly.
Adam Marshall, director general of the British Chambers of Commerce, said: “Our research indicates that two-thirds of firms have furloughed some portion of their workforce.
“With April’s payday approaching, it is essential that the application process is smooth and that payments are made as soon as possible.
“Any delay would exacerbate the cash crisis many companies are facing and could threaten jobs and businesses.”
An economic downturn seems likely with many businesses closed for the foreseeable future
The government has said the HMRC portal is easy to use and offers a step-by-step application process, and it claims up to 5,000 staff will be manning call centres and an online live chat service to ensure any questions can be answered.
Chancellor Rishi Sunak said: “Our unprecedented Job Retention Scheme will protect millions of jobs across the country and is now up and running.
“It’s vital that our economy gets up and running again as soon as it’s safe – and this scheme will allow that to happen.”
In light of lockdown restrictions in the UK being extended for another three weeks, Mr Sunak recently announced that these direct cash grants will now be active until the end of June.
A report released today by an independent think tank suggests that as many as 11.7 million people could be furloughed or unemployed over the next three months.
The Resolution Foundation says those working in the lowest-paying hospitality and retail sectors are 50% more likely to be affected than the rest of the labour market.
Only 4% of those working in the highest-paid sector, finance and insurance, are likely to be furloughed.
The report warned: “Unemployment could still rise sharply to 3.4 million (10%) in the second quarter of 2020, but because of the Job Retention Scheme, it will not reach catastrophic levels.”
In other developments, the chancellor has announced that a £1.25bn package is being launched to help protect the UK’s innovation sector during the COVID-19 pandemic.
Mr Sunak said this initiative will include a £500m investment fund for high-growth companies hit by the crisis.
He added: “Our start-ups and businesses driving research and development are one of our great economic strengths, and will help power our growth out of the coronavirus crisis.
“This new, world-leading fund will mean they can access the capital they need at this difficult time, ensuring dynamic, fast-growing firms across all sectors will be able to continue to create new ideas and spread prosperity.”