We must enable the economy to recover as soon as practicable

[Domh245]

I don’t disagree, however I can’t help but find the furlough scheme too generous. £2.5k per month is a *lot*, especially when people’s costs should be lower on account of there being less to do / spend money on at this moment in time.

up to £2.5k, for which you'd have to be on £37.5k to earn - needless to say that most furloughed staff will be on significantly lower. That's still taxed as normal, and I'm also fairly confident in saying that most of it will be flowing back out to the economy again, primarily in rent. There's less to do and spend money on, but for a lot of people there wasn't much to spend on such things in the first place

 

[ainsworth74]

I don’t disagree, however I can’t help but find the furlough scheme too generous. £2.5k per month is a *lot*, especially when people’s costs should be lower on account of there being less to do / spend money on at this moment in time.

Only it's not £2,500 automatically it's 80% of whatever your typical wage is up to a maximum of £2,500. Employers can choose to top that up themselves so you still get 100% but the Government element of the scheme is 80% of your wage. And I bet not many employers are topping up wages so a lot of people on furlough will have taken a 20% pay cut whilst being on furlough. And, again, it isn't a scheme which you can opt in or out of as you like as an employee. Your employer has to decide if you get to be furloughed and can decide to recall you when they feel like it.

 

[Bletchleyite]

I wonder if we should consider adopting, possibly temporarily, the Chapter 11 Bankruptcy Protection system the US has, at least for small businesses? It allows a business to restructure, as many will need to, without the vultures getting it while they do, by suspending debt liability for this period.

 

[underbank]

Agreed that it's a fine line to tread, and I mentioned that in a post earlier in this thread (I think). This post seems like a sensible way forward - some form of proof that even though you aren't required to be shutdown, the situation makes it unviable to open. That does then create a bit of a chicken and egg situation for some employers, where they can't open because nobody near them is open, because nobody else is, etc.

To an extent yes, but that's a localised issue. In our village, the Butchers, Post Office, Newsagents, Spar shop and Ironmongers have stayed open throughout. The bakery/pie/cake shop, the fish & chip shop and the garage closed on the day of the lockdown. All are literally just yards from each other on the main street. I fail to see how the latter 3 businesses knew that they'd have too few customers to be viable when they closed within just a few hours of the lockdown announcement. The businesses that stayed open all look busy enough - obviously they've introduced social distancing - nearly always someone queuing outside one or other of them. Sorry to say it, but I do feel that the ones who closed had just taken the knee jerk reaction, listened to misleading media reports rather than reading the actual guidance on the gov.uk website and closed, safe in the knowledge of the support/grants they were going to get to tide them over.

I think they're going to struggle when they finally reopen. The bakery/pie/cake shop in particular as the Spar shop next door have increased their range of sandwiches, pies, cakes etc. Likewise a garage in the next village (which stayed open) has been heavily advertising on local Facebook pages that they were open and happy to collect/return vehicles from our village. The nearby restaurants have started doing takeaway/deliveries so that will impact on the village fish & chip shop.

 

[Bletchleyite]

I think acceptance of risk varies between (and within) families, and this sort of thing is usually a family business. For instance my local Indian takeaway has not closed at any point and has not changed anything about their operation other than vaguely asking people if they wouldn't mind ordering by phone, whereas the chippy closed for a fair while and has now reopened with them wearing gloves and masks, only one person in at once and a perspex screen in place.

At my local shop (also family run) the wife is wearing mask and gloves and the husband nothing at all.

 

[bramling]

I think acceptance of risk varies between (and within) families, and this sort of thing is usually a family business. For instance my local Indian takeaway has not closed at any point and has not changed anything about their operation other than vaguely asking people if they wouldn't mind ordering by phone, whereas the chippy closed for a fair while and has now reopened with them wearing gloves and masks, only one person in at once and a perspex screen in place.

At my local shop (also family run) the wife is wearing mask and gloves and the husband nothing at all.

My local Indian closed, which was apparently due to difficulty in getting food supplies in. They re-opened a week or two ago, although the only way to find this was to phone or pass by as they don’t have a website. By all account they already seem to be doing a decent trade.

Personally I’m more than happy to support such businesses, indeed we’ve had two takeaways in the space of a week to make up for lost time so to speak. I’d rather patronise such places than the supermarkets, who at a corporate level have had a bit of an easy time recently with no effective competition.

I’ve certainly been trying to support local businesses where possible, including bringing forward a few things in order to bump up business. Personally I see propping up the established small businesses as far more important than sustaining the glut of ultimately pointless cafes and barber shops which have appeared in my town over the last couple of years.

 

[43066]

up to £2.5k, for which you'd have to be on £37.5k to earn - needless to say that most furloughed staff will be on significantly lower. That's still taxed as normal, and I'm also fairly confident in saying that most of it will be flowing back out to the economy again, primarily in rent. There's less to do and spend money on, but for a lot of people there wasn't much to spend on such things in the first place

Isn’t it max £30k gross (2.5k * 12)?

And, as you say, subject to income tax and NI as per a normal salary.

 

[trebor79]

Really the furlough scheme ought to be limited to those sectors of the economy which have been specifically ordered to close. Garages and other businesses which have been allowed to stay open, but have decided to close off their own back shouldn't be eligible for government support.

 

[Bantamzen]

Really the furlough scheme ought to be limited to those sectors of the economy which have been specifically ordered to close. Garages and other businesses which have been allowed to stay open, but have decided to close off their own back shouldn't be eligible for government support.

Why not, the government gave these businesses the option as they might not have felt able to quickly change business practices to follow distancing guidelines.

 

[Bletchleyite]

Why not, the government gave these businesses the option as they might not have felt able to quickly change business practices to follow distancing guidelines.

I think he's suggesting this should be the case going forward (with a few weeks' notice) and I would agree.

I'd have gone with UBI, but as an immediate solution it works, but it now needs to be adapted so it's not basically providing free holidays.

 

[43066]

Only it's not £2,500 automatically it's 80% of whatever your typical wage is up to a maximum of £2,500. Employers can choose to top that up themselves so you still get 100% but the Government element of the scheme is 80% of your wage. And I bet not many employers are topping up wages so a lot of people on furlough will have taken a 20% pay cut whilst being on furlough. And, again, it isn't a scheme which you can opt in or out of as you like as an employee. Your employer has to decide if you get to be furloughed and can decide to recall you when they feel like it.

Of course that represents a hell of a lot more than a 20% pay cut for people who were on significantly more than £30k per year.

 

[bramling]

Why not, the government gave these businesses the option as they might not have felt able to quickly change business practices to follow distancing guidelines.

That may have been reasonable back in March, but it’s not viable now going forward.

I think most people expected the furlough scheme to last for a couple of months. 6 months and perhaps more is way too long.

We also need to consider the fact that, unless a vaccine appears, many shielded people may not be able to return to work for some time. There’s going to a potentially massive cost there too.

 

[Domh245]

To an extent yes, but that's a localised issue. In our village, the Butchers, Post Office, Newsagents, Spar shop and Ironmongers have stayed open throughout. The bakery/pie/cake shop, the fish & chip shop and the garage closed on the day of the lockdown. All are literally just yards from each other on the main street. I fail to see how the latter 3 businesses knew that they'd have too few customers to be viable when they closed within just a few hours of the lockdown announcement. The businesses that stayed open all look busy enough - obviously they've introduced social distancing - nearly always someone queuing outside one or other of them. Sorry to say it, but I do feel that the ones who closed had just taken the knee jerk reaction, listened to misleading media reports rather than reading the actual guidance on the gov.uk website and closed, safe in the knowledge of the support/grants they were going to get to tide them over.

I agree, a lot of places that closed didn't need to and were either as a result of kneejerk reactions, or allowing themselves time to develop a plan for how to work safely with social distancing in place. There are still however plenty of cases were there genuinely isn't the custom to sustain a business (for example, a takeaway in the middle of a commercial area with no footfall as everything else is closed) - it's why the businesses will need to prove that opening isn't viable, even though they could be

 

[ainsworth74]

Of course that represents a hell of a lot more than a 20% pay cut for people who were on significantly more than £30k per year.

Yes a very good point! Someone who is on £50,000pa for instance has just had a huge pay cut if they've been furloughed and their employer isn't topping up their wages. Doesn't seem like much of an "extended bank holiday" to me losing that level of income...

 

[WelshBluebird]

In which case furlough to October is simply kicking the can down the road.

My point about specific industries wasn't really related to the furlough scheme and was more around why we will likely see some redundancies even whilst the scheme is in place.

We also have to question whether subsidising non-vital businesses is the best use of limited resources.

The furlough scheme isn't directly subsidising non-vital businesses as the employees can't do any work. They would have just been made redundant had the scheme not happened. What it is doing however is keeping a massive number people out of unemployment. You think the economy can't handle continuing the scheme? I doubt it would handle almost 10 million people becoming unemployed either!

 

[Domh245]

Isn’t it max £30k gross (2.5k * 12)?

And, as you say, subject to income tax and NI as per a normal salary.

It's 80% of your salary up to £2.5k so (2.5k/0.8)*12 - if you were on £30k, you'd be getting (30k/12)*0.8 = £2k from CJRS

 

[43066]

It's 80% of your salary up to £2.5k so (2.5k/0.8)*12 - if you were on £30k, you'd be getting (30k/12)*0.8 = £2k from CJRS

Ah yes, I see what you mean. I was forgetting the 80% cap.

 

[WelshBluebird]

One point worth adding about the furlough scheme, is it is also protecting other jobs that may not have been made immediately redundant as it is helping otherwise healthy businesses stay afloat (.e.g. my work has people on furlough and that means the company has a much better chance of surviving, meaning even those of us who are still working are benefiting from the scheme). Complain about handing public money to private companies if you want, but just as my feelings about Airlines asking for bailouts, sometimes you have to swallow you pride and deal with the devil. I'd much rather companies survive than have the country have to deal with loads of businesses all going out of business and millions upon millions more people being unemployed.

 

[HLE]

Do they? We have the real risk now of a situation where some people become addicted to furlough, and at some point the massive bill will have to be picked up. It seems to be that the right hand isn’t talking to the left.

80% is too generous in my view.

I doubt that. From friends and relatives currently furloughed they've said for a few weeks now they'd rather be in work earning 100% of their wage. I see their point too, can't go out to do anything with their free time! I haven't seen anyone on my Facebook actually gloat about being furloughed, which has surprised me.

Certainly from posts on here there's industries that are out for the long term. It's not free money, we'll all be paying for it in the end. But, if it wasn't extended, and even a third of the furloughed workforce was made redundant that's over 2 million people added to the job seekers scheme. If they're in work and can return to their old jobs that's a) additional job capacity long term and b) more people contributing in income tax/NI resulting in me paying less. Very simplistic way of seeing it but that's how I do.

I do sense some bitterness on social media from those not furloughed. But being shut in the house all day? I'd rather work, mentally it's a lot healthier.

 

[43066]

Something I’m not clear on, these repayment holidays people are being given on mortgages, credit cards etc. Presumably their credit ratings will be affected?

That could have pretty dire consequences going forward.

 

[Bletchleyite]

It's 80% of your salary up to £2.5k so (2.5k/0.8)*12

Not quite. The 2.5K cap is not on the previous salary, it's on the furlough total. So the max furlough payment is £30K (gross), but that would be paid for someone on £37,500.

 

[HLE]

Something I’m not clear on, these repayment holidays people are being given on mortgages, credit cards etc. Presumably their credit ratings will be affected?

That could have pretty dire consequences going forward.

Not for personal loans or mortgages as far as I'm aware. Remember my bank sending a generic email stating it won't. It's only if you can't repay once the holiday is over.

 

[ainsworth74]

The furlough scheme isn't subsidising non-vital businesses as the employees can't do any work. They would have just been made redundant had the scheme not happened. What it is doing however is keeping a massive number people out of unemployment. You think the economy can't handle continuing the scheme? I doubt it would handle almost 10 million people becoming unemployed either!

This is of course why, in part at least, certain sections of the US are screaming that the country must be instantly reopened. They've had 33 million people apply for unemployment benefits and a jobless rate of 14.7% (up from 3.5% a few months ago). If we had 10 million people unemployed or some other mind boggling number of unemployed people I imagine we'd have similar issues here as well. Thankfully whilst unemployment is ticking up very quickly it's not reached a crisis point because the Government have stepped in to support jobs. A concept which, of course, would be anathema in the swashbuckling free market US...

 

[Domh245]

Not quite. The 2.5K cap is not on the previous salary, it's on the furlough total. So the max furlough payment is £30K (gross), but that would be paid for someone on £37,500.

Agreed, but I was looking at it from the point of view of how many people will be getting the full £2.5k a month from the government, for which the pre-furlough pay is the important bit! Based on the UK median wage being £24,897, it's quite clear that most people will not be getting the full £2.5k (based on that median wage, around £1660 a month!)

 

[sjpowermac]

I don’t disagree, however I can’t help but find the furlough scheme too generous. £2.5k per month is a *lot*, especially when people’s costs should be lower on account of there being less to do / spend money on at this moment in time.

Before being critical of others, you may like to reflect upon how many Train Operating Companies, including your own, would currently be in business had the government not stepped in with a very generous support package for the railway industry. £900 000 per month was mentioned in ‘Modern Railways’ last month. It seems the amount will total at least £5 billion for rail by the time we are finished.

Are you against fellow industry colleagues on TfL receiving furlough money?

‘Last week it [TfL] furloughed 7,000 staff – 25% of its workforce – which will save it £16 million a month.’

TfL needs financial rescue, says ASLEF union - City Matters

Finn Brennan, the London district organiser for ASLEF, said TfL faces a huge funding shortfall due to lost passenger numbers, which will continue after lockdown restrictions are lifted.

www.citymatters.london

It seems TfL need at least £500 million to keep going. Do you object to that?


I’m delighted that the government have stepped in to help the rail industry to survive, I think it’s a crucial national asset. Your sniping at others though is a bit hard to fathom.

 

[trebor79]

There are still however plenty of cases were there genuinely isn't the custom to sustain a business (for example, a takeaway in the middle of a commercial area with no footfall as everything else is closed) - it's why the businesses will need to prove that opening isn't viable, even though they could be

Tough. Government supporting businesses that they have ordered to temporarily close is one thing. Government should not be supporting businesses that are no longer viable due to changes in personal habits, demographics or changes in food fads. There's no long term positive impact for the economy there.

 

[43066]

Yes a very good point! Someone who is on £50,000pa for instance has just had a huge pay cut if they've been furloughed and their employer isn't topping up their wages. Doesn't seem like much of an "extended bank holiday" to me losing that level of income...

My mate I’m speaking to later has taken a 50% pay cut. His wife has been made redundant (so no furlough pay at all, and no redundancy pay as she’d recently started a new role). He has a mortgage and two kids to support. He doesn’t see it as a bank holiday.

This is of course why, in part at least, certain sections of the US are screaming that the country must be instantly reopened. They've had 33 million people apply for unemployment benefits and a jobless rate of 14.7% (up from 3.5% a few months ago). If we had 10 million people unemployed or some other mind boggling number of unemployed people I imagine we'd have similar issues here as well. Thankfully whilst unemployment is ticking up very quickly it's not reached a crisis point because the Government have stepped in to support jobs. A concept which, of course, would be anathema in the swashbuckling free market US...

My worry is that we haven’t yet seen the full extent of the damage. A lot of businesses are on a financial knife edge, and may well go to the wall over the next few weeks, especially in the hospitality sector. The automotive industry and aviation are two other sectors which are being decimated. The furlough scheme is only any good if you have a solvent business employing you.

It’s starting to feel like the world has gone mad. What this government should be doing is getting the economy moving again ASAP.

 

[HLE]

Before being critical of others, you may like to reflect upon how many Train Operating Companies, including your own, would currently be in business had the government not stepped in with a very generous support package for the railway industry. £900 000 per month was mentioned in ‘Modern Railways’ last month. It seems the amount will total at least £5 billion for rail by the time we are finished.

Are you against fellow industry colleagues on TfL receiving furlough money?

‘Last week it [TfL] furloughed 7,000 staff – 25% of its workforce – which will save it £16 million a month.’

TfL needs financial rescue, says ASLEF union - City Matters

Finn Brennan, the London district organiser for ASLEF, said TfL faces a huge funding shortfall due to lost passenger numbers, which will continue after lockdown restrictions are lifted.

www.citymatters.london

It seems TfL need at least £500 million to keep going. Do you object to that?


I’m delighted that the government have stepped in to help the rail industry to survive, I think it’s a crucial national asset. Your sniping at others though is a bit hard to fathom.

The rail industry will be affected in the long term. So many think it's immune. If people don't travel, they don't need the capacity after this is all over. All sorts of roles within the railway will be affected.

 

[Domh245]

Government should not be supporting businesses that are no longer viable due to changes in personal habits, demographics or changes in food fads. There's no long term positive impact for the economy there.

That's assuming the changes in habits are permanent. Post-COVID there's no reason why large shopping centres and city centres won't go back to normal, including people stopping off for bites to eat at the likes of Greggs and McDonalds, which would naturally be closed at the moment because there's nobody shopping, but will be perfectly viable when shops reopen. In some cases you may be right, particularly if they're businesses set up to support offices and office work, but until we've come out the other side, we don't know how (or if!) habits will have changed

 

[trebor79]

That's assuming the changes in habits are permanent. Post-COVID there's no reason why large shopping centres and city centres won't go back to normal, including people stopping off for bites to eat at the likes of Greggs and McDonalds, which would naturally be closed at the moment because there's nobody shopping, but will be perfectly viable when shops reopen. In some cases you may be right, particularly if they're businesses set up to support offices and office work, but until we've come out the other side, we don't know how (or if!) habits will have changed

Well indeed. But a few takeaways are hardly strategic industries and are relatively cheap and quick to reopen (possibly under new ownership) when the time comes.
Sorry, I just don't agree that businesses which are not capital intensive and with low barriers to resumption of viable post-COVID should be indefinitely propped up, just because they've decided trading conditions are a bit tricky at the moment.