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NITA’s Considerations for the Extension of the Furlough Scheme

Posted 26 May, 2020

Earlier this month, the Chancellor announced the extension of the Coronavirus Job Retention Scheme (CRJS) by a further four months with workers continuing to receive 80% of their current salary. From the start of August, he announced there would be flexibility and furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries. The employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month. Further details of the scheme are due presently therefore NITA in partnership with its members has pulled together a few key considerations for the tourism industry given its unique position, having been at the forefront of the catastrophic economic impact of COVID-19 and with the longest recovery period.

There is no doubt that the CJRS has been a lifeline for tourism and has enabled many businesses to retain vital skills within an industry were there is already a documented skills gap. NITA welcomes the flexible approach suggested by the Chancellor, enabling employees to work part time whilst still utilising the scheme, and looks forward to reviewing the new parameters, once they are announced. In principle this should allow businesses to raise activity levels, alongside demand, elevating further cashflow issues and unemployment levels.

However, NITA requests that special consideration is given for industries, including tourism, leisure and hospitality, that have been hardest hit by the crisis, for example around the employer’s contribution. For any business in a position to contribute, this is a reasonable request but for sectors such as tourism and hospitality which will face far bigger challenges in restarting under continued social distancing as well as its reliance on seasonal income, ongoing support needs to be considered.

In addition to the above, the Northern Ireland tourism industry are requesting an extension to CRJS scheme beyond October 2020. The industry, unlike any other part of the economy, was hit at the end of the quietest part of the tourism calendar with reserves and cash flow at a minimum and investments already made and with limited opportunities this year due to consumer confidence.

In addition to the above, tourism will be reopening with the cost of implementing social distancing and revenue reduction, alongside the reduction in visitor numbers with the international market unlikely to start to bounce back until March/April 2021, there is a limited number of staff that tourism businesses will be able to support in the early stages of re-opening. Therefore, government should taper support relative to this and provide a flexible support package.

If the scheme is not extended past October, it would not make sense for some tourism businesses to remodel in the short term when it would be more financially and operationally efficient to restructure and commence a programme of redundancies.

Without the above support, the aforementioned skills gap in the industry would likely be exacerbated, therefore effecting tourism’s economic impact on a long-term basis.

NITA has raised these points for consideration locally via the Department of Economy and nationally via TIER (Tourism Industry Emergency Response) and Visitor Economy Group, which was recently set up for feed into the UK Ministerial Taskforce to shape tourism reopening and recovery from COVID-19.