Hundreds of thousands of workers, across all sectors, are being failed by the Government’s Job Retention Scheme, designed to help companies hit by the Covid-19 crisis.
Treasury Select Committee member Rushanara Ali, MP for Bethnal Green and Bow, has written to the Chancellor demanding urgent action before hundreds of thousands are thrown into even greater financial difficulty.
The problem is that the cut-off date of 19 March for a worker to be eligible for payments under the scheme does not take into account hundreds of thousands of workers in the real, flexible economy. Rushanara Ali MP is calling on the Chancellor to shift the date to the end of March, thus protecting thousands of families.
The Government scheme does not take into account the significant numbers of employers who submit Real-Time Information (RTI) to the HMRC, and add employees to their payroll at the end of the month. This means many people who are starting a new job will still be ineligible under the government’s scheme.
While there is the option for those who have been made redundant or stopped working for an employer between 28 February and 19 March to approach their previous employer to be re-employed and furloughed, reports suggest that often these requests are being refused.
During a Treasury Select Committee session on 21 April, Kate Nicholls, the CEO of UKHospitality revealed that between 350,000 and 500,000 people in the hospitality industry may not be eligible for the scheme. This represents a huge number of workers and their families placed in financial peril.
Tens of thousands of hospitality workers who are eligible will only receive half of their wages due to service charge, cash tips and commission being excluded from the scheme.
The tourism industry is also hard hit. In 2017, the ONS estimated that there were around 380,000 seasonal workers in the UK’s tourism industry. The contracts of these seasonal workers often start in March at the earliest, leaving hundreds of thousands of people at risk of not being on the payroll by 19 March.
Rushanara Ali MP has been contacted by workers in the tourism industry who make their entire years’ salary over the spring and summer months, which they are set to lose without access to the scheme.
She said: ‘I appreciate the hard work that has gone into developing these schemes. However, the Government has failed to recognise the dire position it has put hundreds of thousands of people in. They have worked hard and paid their taxes but are now not being protected by the scheme. They urgently need the Government to step in to protect them from financial ruin at this incredibly difficult time.
‘I urge Ministers to continue to act on our feedback about the remaining problems with the Job Retention Scheme to help those who have been arbitrarily excluded. The Chancellor must listen, and act now.’