Furlough 'godsend' running out - but city still needs help

Two Magpies owners Rebecca Bishop and Steve Magnall outside one of their bakeries

Two Magpies owners Rebecca Bishop and Steve Magnall are expanding their cafe and bakery operations across Suffolk and Norfolk - Credit: Two Magpies

Furlough has been a "godsend" for businesses - but the lifeline policy is about to run out. 

This week marked the end of the scheme as companies knew it, with the government now footing the bill for 70pc of wages. 

Over the coming months this will decrease further with the scheme winding down by September. 

And while many people in Norwich have had their prospects secured thanks to Rishi Sunak's plan, the pay packet did not come for free. 

A woman looking into the window of a job centre, as a jobs fair is held in Great Yarmouth next week.

Is a September deadline for the furlough scheme just putting off the inevitable? Photo: Rui Vieira/PA Wire - Credit: PA

Steve Magnall, director at bakery the Two Magpies in Timberhill, said: "It's been a godsend, that's undeniable. I've opened two new sites this year to make the most of the opportunity with pent-up demand, and I don't think I would have done that if it hadn't been for furlough. 

"Our business would have survived. We saw the pandemic coming and had already scaled back staff. It's also worth remembering that this isn't free money - we'll have to pay it back some time. 

"Furlough doesn't need to be extended across the board but for pubs and late-night industries, it potentially should be.

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"The real shock will be a return of business rates and VAT rises - the high street was being decimated by online retailers before the pandemic and this was an advantage. It would be a real win if those policies could be looked at."

And experts have warned that retracting support too soon will damage businesses and individuals alike. 

Elena Magrini, senior analyst at think tank Centre for Cities, said: "The furlough scheme was not just good for businesses - it kept a lot of people who would otherwise be in serious debt out of it. Instead, people have saved and in time will release that cash into the economy, thus creating more demand and jobs. 

Football fans at the Woolpack pub in Norwich. Picture: Denise Bradley

Hospitality is only open at partial capacity - Credit: Denise Bradley

"The government is right to scale back support if their plans to fully reopen the economy go ahead. However, if businesses are still operating under restrictions they cannot be expected to do so without any help.

"It would create unemployment for those currently on furlough, through no fault of businesses which otherwise would have cash running through them."

  • Furlough Q&A

What's changed? 

From July 1, businesses across Britain will have to start making compulsory contributions to pay. 

The government's pay falls to 70pc for the first time this year.

The monthly limit of £2,500 will stay in place, so employees will not notice the difference.

What happens next? 

From August, the support falls once again. 

Firms will be asked to contribute 20pc of the 80pc paid to staff, as well as tax and pension contributions. 

The government will, however, top up the remaining 60pc of earnings up to £1,875. 

When does it end? 

The scheme is set to end in September, though calls are already being made to extend furlough after delays to lockdown. 

Labour’s shadow chief secretary to the Treasury Bridget Phillipson said: “A month’s delay (to easing lockdown) may seem like a short time, but for businesses in retail, hospitality and leisure, legally closed from trading or relying on the summer season, the delay is another blow.

“The government must make sure economic measures go hand in hand with public health measures and that our British businesses and high streets are not left out in the cold.”