Funding new working patterns must be part of the lockdown relief package

As I See It: Terry Murden

There may be a lot of businesses still unable to qualify for government support but no one can accuse governments either side of the border of not pulling out the stops to underpin the economy.

Twice yesterday the First Minister was asked about finding more missing pieces in the subsidy jigsaw – for those who do not have a business account or who pay themselves dividends. Nicola Sturgeon said ministers were on the case. But she repeated the message of the UK Chancellor Riski Sunak that there is no guarantee that every business will get support.

The challenge now is how long the taxpayer crutch can be applied and how government withdraws it without undermining why it was provided in the first place.

Among the myriad of packages, perhaps the most important has been the job retention scheme. It has ensured millions of workers continue to have an income and, hopefully, a job to return to when the emergency ends.

What is certain is that the government cannot continue to fund businesses at current £10 billion a month rate for more than a few weeks. The current furlough scheme, which guarantees 80% of wages for laid-up employees up to a maximum of £2,500 a month, expires at the end of next month and the Treasury will not want to see it extended, at least without a sharp reduction in the cost.

Managing this transition is now taking precedence, but this is no longer just about balance sheets and wage packets. The workplace will look a lot different and working practices will change, at least for several months and for as long as the risks surrounding the virus continue.

A somewhat optimistic British Chambers of Commerce poll earlier this week suggested most firms could be ready to return within three weeks and one in four would require no notice. That’s the good news. A new survey from the Institute of Directors says only half of companies could operate at pre-crisis levels under requirements for social distancing. Some, such as pubs and airlines, say it is just not possible to work in this manner and remain viable.

It looks like there will be a phased return to work and more than one in five respondents to the IoD poll thought they could work at less than half capacity. This implies either a widespread adjustment to working with lower income – and all the cost implications that entails – or else a continuation of a lower level of state support until things get back to ‘normal’.

More than half (53%) of firms thought it would take more than a month to return to pre-lockdown levels of activity. That may be somewhat optimistic, given that other surveys are forecasting closures or cutbacks to cope with a severe drop in demand. One in three pub and restaurant owners expect to close outlets. Hotels, airlines and visitor destinations expect to operate well below capacity.

For the government’s number crunchers and policy makers the key will be keeping as many people in work as possible without adding significantly to that £10 billion a month bill.

Revisions of the job scheme to allow for more part-time and other flexible working must be high on the agenda, along with subsidies for protection equipment and provision against insurance claims. Jonathan Geldart, director general of the IoD, says directors have significant legal liabilities and they need the confidence that if they do the right thing they won’t be at undue risk.