Majority of firms laying off staff in pandemic

Two-thirds of British businesses have furloughed employees because of the coronavirus pandemic, according to a report published on Wednesday by the British Chambers of Commerce (BCC).

David Sapsted

15 April 2020

The report found that 31 per cent of the 700 firms surveyed had laid off between 75-100 per cent of their workers as they awaited funds from the government's Job Retention Scheme, which will pay 80 per cent of a furloughed worker's salary up to a maximum of £2,500 a month.Worryingly, the survey also recorded that only two per cent of companies had successfully applied for government-backed bank loans - which are considered essential to keep many companies in business during the pandemic - under the Coronavirus Business Interruption Loan Scheme ((CBILS).The report said that businesses' cash flow was an important indicator of overall economic health and remained "an urgent concern" with more than half of firms reporting cash in reserve of three months or less.Adam Marshall, director-general of the BCC, said: “Businesses on the frontline need cash to start flowing from support schemes fast. With April’s payday coming up, we are fast approaching a crunch point, and both the furlough scheme and CBILS facilities need to be accelerated.“While we’ve seen a high number of firms furloughing staff in anticipation of the Job Retention Scheme coming online, it is still unclear whether they will start receiving funds before their payroll date, which could exacerbate the cash crisis many businesses are facing. “It is essential that the Job Retention Scheme makes payments to businesses as soon as possible. Any delay could mean more livelihoods under threat, more business failures, and more hardship in our communities.” A spokesman for HM Treasury said: "We've been taking unprecedented action at unprecedented speed to help businesses, jobs and our economy during this crisis - with hundreds of thousands of firms across the county benefitting from our wide package of support."Our jobs retention scheme is ensuring people are able to stay employed during the outbreak and approvals for our business interruption loan scheme has shown an eightfold increase in the last two weeks - with around 4,200 loans worth just over £800 million. We're working closely with banks to ensure we get this support out to those who need it as soon as possible."