There are concerns for Wales’ small businesses after the Chancellor announced that the cost of the furlough scheme will be shared between the UK Government and employers.
Rishi Sunak announced that the Government’s furloughing scheme would be extended until October, but with the Government’s contribution reducing and employers being expected to make up the difference.
Workers will continue to receive 80% of their wages if they cannot work but the cost will be shared with employers from the end of July.
The Welsh Liberal Democrats warned that many small businesses will not be able to afford this additional financial burden.
Welsh Liberal Democrat Leader Jane Dodds said she was “deeply concerned” that small businesses “will be left shouldering more and more of the financial burden from August”.
“There are thousands of small businesses across Wales who have not been seeing any income at all over the past few weeks because of the lockdown,” she said.
“Local shops, hairdressers, exercise facilities and others simply do not have the money to pay 20% of their employees’ wages.
“Expecting these smaller businesses to start shouldering the cost will leave many facing the onerous choice of asking staff back to work, taking on extra debt in the hope things will improve before their repayments begin, or calling it a day on their business now.
“If we want our economy to bounce back, then we need to ensure the policy reflects the reality on the ground. I hope the Chancellor reconsiders this approach.”
Announcing the move in response to an urgent question from Labour, Sunak told the Commons: “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 government had faced criticism after a senior government source briefed workers were “addicted” to the furlough and needed to be “weaned off” the scheme. But Sunak disowned the language used in some briefings.
The chancellor said: “The use of the word addiction is not one that I have ever used, and not one that I agree with.
“Nobody who is on the furlough scheme wants to be on this scheme.
“People up and down this country believe in the dignity of their work, going to work, providing for their families.
“It is not their fault that their business has been asked to close, it is not their fault that they have been asked to stay at home, and that is why I established this scheme to support these people and their livelihoods at this critical time.”