FCSA Chief Executive, Julia Kermode responds to the government’s summer economic update in which the Chancellor, Rishi Sunak announces a stimulus package to kickstart the UK economy.:
The job retention bonus for employers who bring back workers from furlough will be a real incentive for businesses who employ people directly and will offer some much-needed financial support during this difficult time. However, for umbrella employers and agencies who operate a very different employment model, the £1,000 per employee bonus falls significantly short of the total financial cost for an umbrella employer or recruitment agency to continue to furlough their employees until the CJRS scheme ends on 1 October 2020.
For those employers of contractors who are in a financial position to continue to furlough, this announcement will be welcomed and will provide some financial support at least whilst they continue to furlough and to re-engage those contractors as soon as the work opportunities arise.
There will, however, be many umbrella employers or agencies, even with this cash bonus, who simply cannot afford to continue to furlough without putting their business at financial risk. This is once again an example of the government’s failure to take into consideration this vital employment model and, as a consequence, potentially putting thousands of contractor jobs at risk in a workforce that has already suffered enough in recent months.
Furthermore, there was no mention of any additional financial help for the self-employed or limited company directors who seem to be forgotten. This is surprising given the widespread media coverage of those falling between the cracks of the government support measures already in place.
It is also disappointing that the government has not announced anything to help those employees who have already been made redundant as a consequence of the coronavirus pandemic. We are aware of many contractors outside of the 16 – 24 age group who are now without work and struggling to get back into employment. These people must not be overlooked; the government must look at ways to incentivise businesses to re-engage our highly skilled and experienced contractor workforce.
Finally, umbrella employers and agencies who supply contractors into the tourism and hospitality sector will welcome the reduced VAT rate of 5% which we hope will help this sector recover as quickly as possible.