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Government salary support scheme extended to October at 80% rate

Chancellor Rishi Sunak

The Chancellor of the Exchequer, Rishi Sunak, has confirmed that the Government Coronavirus Job Retention Scheme (CJRS) will be extended to October – at its current 80% rate of salary support.

In a televised press conference this lunch-time, Sunak dismissed fears that the scheme would start to support businesses with a reduced rate of salary contribution – reported by some national news outlets to be 60% – with confirmation that the cap would remain at 80% of a monthly wage, up to a £2,500 limit.

He did, however, stress that businesses would be asked to "start sharing" the cost of the scheme from August.

Sunak said: "I'm extending the scheme because I won't give up on the people who rely on it.

"Our message today is simple: we stood behind Britain's workers and businesses as we came into this crisis, and we will stand behind them as we come through the other side."

The Chancellor’s announcement eases fears that car retailers, who expect to open their doors alongside “non-essential retail” businesses no sooner than June 1 under the Government’s ‘COVID-19 Recovery Strategy’, would be under increased pressure to reintroduce employees to dealerships which were unable to trade.

Some car retailers who have continued to pay employees above the 80% (or £2,500) support limit offered by Government may also have suffered a disproprtionate financial burden had the scheme's terms been reduced.

AM has previously reported that the financial balance of returning furloughed staff to work had become businesses' "biggest challenge".

To that end, the Chancellor has also changed the scheme to allow employees to be reintroduced to the workplace on a part-time basis from August, while still receiving part of their salary via the CJRS.

Car retailers and the Independent Garage Association (IGA), which had appealed for greater flexibility from the CJRS, will be among those welcoming the move.

IGA chief executive, Stuart James, said: “We welcome the Chancellor’s update and extension to the furlough scheme, which will allow businesses to bring staff back to work on a part-time basis.

“We thank the Chancellor for listening to the IGA’s proposal to implement a flexible furlough scheme.

“As highlighted in our letter, many independent garages have suspended activity since the coronavirus crisis escalated due to the decrease in work volumes caused by lockdown restrictions and the MOT extension.

“This support from the Government will help independent garages with a gradual, stable approach when reopening.”

Over a quarter of all workers, some 7.5 million people in total, are currently covered by the CJRS scheme.

In an interview with AM earlier this month Clive Brook group managing director, Clive Brook, described returning furloughed staff to the business’ payroll during the period of low demand as “the biggest risk to the business so far”.

Brook said: “It’s fairly obvious. When you bring someone back you have to have the income to justify their place in the business. It’s a fine financial balance to strike.

“Without doubt, managing the return to work will be the biggest challenge, financially, for the automotive retail sector.”

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