Fewer workers in Aberdeenshire on furlough as UK Government begins wind down

Thousands fewer workers in Aberdeenshire were on furlough in May – but as the scheme starts to be wound down, the UK Government has been accused of acting too fast.

Thursday, 1st July 2021, 3:41 pm
Updated Thursday, 1st July 2021, 3:43 pm
Concerns have been raised that the UK Government is winding down the furlough scheme too soon.

As of today (July 1), employers must pay 10 per cent of the salary for furloughed staff, rising to 20 per cent in August and September, when the support scheme ends.

But there are fears many businesses will not be able to afford the cost with parts of the economy still restricted by Covid measures.

The latest figures from HM Revenue and Customs show that 7,600 jobs held by workers living in Aberdeenshire were furloughed in May.

That was 4,700 fewer than the 12,300 furloughed at the end of April.

The reduction coincided with an easing of restrictions which led to the reopening of indoor entertainment and hospitality, along with holiday accommodation.

The figures show that in May in Aberdeenshire:

• Furloughed jobs in the retail sector dropped by 1,100, to 1,120;

• In the arts, entertainment and recreation sectors, 280 fewer jobs were supported by the scheme, with 370 still furloughed;

• The number of hospitality jobs furloughed fell by 1,270, to 1,340.

The furlough scheme, formally called the Coronavirus Job Retention Scheme, started with the UK Government paying 80 per cent of a worker’s wages, up to £2,500 per month, if they were not able to work due to the impact of the pandemic. Employers could choose whether to make up the rest of staff salaries.

The reduction in Government support to 70 per cent with firms now required to pay 10 per cent of furloughed staff salaries will cost businesses £322 in July to keep an employee earning £20,000 a year on the books, according to the Institute of Fiscal Studies.

That could be too much for some businesses, leading to job losses, say politicians and business groups.

Labour's shadow chief secretary to the Treasury Bridget Phillipson said: "The Government must make sure economic measures go hand in hand with public health measures and that our British businesses and high streets are not left out in the cold.”

British Chambers of Commerce director general Shevaun Haviland said: “The taper of government payments into the furlough scheme should be immediately deferred until we take the final step in the road map, and further grant support should be extended to the worst affected businesses.”

The UK Government has spent £66 billion on the furlough scheme since it started in March last year.

A spokesperson said: "We deliberately went long with our support to provide certainty to people and businesses over the summer, and that support, which is a substantial amount of funding, is continuing."

The spokesperon added that additional support was being given to businesses through grants, business rates relief and a cut in VAT.

Separate HMRC figures show 8,100 self-employed workers in Aberdeenshire have received Government cash since the self-employment income support scheme started. The total value of the claims made across the area stood at £75.3 million by June 6.