The travel, aviation and hospitality industries are anxiously waiting to hear whether they will be singled out for support from Rishi Sunak as part of emergency measures to save jobs over the winter.
The chancellor is to outline his winter economy plan to MPs in the House of Commons at 12.30 in a bid to avoid mass redundancies as the government’s furlough scheme ends on October 31.
The economic rescue package comes in the face of new Covid-19 restrictions expected to last for six months.
Kuoni boss Derek Jones warned that only “decisive government intervention” and sector specific support will save many previously successful travel companies ahead of a “vacationless winter”.
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A wage subsidy for people who work at least half their normal hours – similar to schemes running in Germany and France – is expected to be a central feature of the economic rescue package alongside extended VAT cuts and more loans for struggling businesses.
Other measures thought to be under consideration by the chancellor include a cut to employers’ National Insurance contributions and a limited extension of the business rates holiday for retail, hospitality and leisure firms.
Sunak tweeted on Wednesday: “As our response to coronavirus adapts, tomorrow afternoon I will update the House of Commons on our plans to continue protecting jobs through the winter.”
He has reportedly been studying a model under which employers pay 100% for hours worked, with the government paying a proportion of the remaining full-time wage.
In one example, the government and employers would share the cost of paying a worker two thirds of their “missing” wages. Employees would have to work at least half their contracted hours to qualify, and a cap was expected on the maximum top-up available.
Sector-specific support call
Business leaders have called on the Treasury for targeted support for the worst-hit sectors, including aerospace, aviation, hospitality and retail, meaning Sunak may limit the help to sectors that need it most, according to The Telegraph.
While the scheme cost about £11 billion a month, a top-up alternative would cost £1 billion a month, according to the Institute for Employment Studies.
Almost 10 million people have been furloughed since the start of lockdown in March at a cost of £39.3 billion so far.
But Sunak is understood to only be looking at supporting jobs that are sustainable in the long term and has repeatedly rejected calls to extend furlough payments due to concerns that it would hold people in jobs that were no longer viable.
A Treasury spokesperson was quoted as saying: “We will always be honest with people about the difficult trade-offs that are involved here – not between health and the economy, but between keeping people in jobs and helping them find new ones. And between help in the here and now and rebuilding in the future.”
Plans for an autumn budget have been cancelled although a government spending review will be held in the autumn.
Jones, chief executive of Kuoni owner DER Touristik UK, tweeted last night: “Whether you’ve been quietly applying pressure behind the scenes or singing about our problems from the rooftops, tomorrow we will find out if the government has been listening.
“Whatever the result we should be proud that we have stood together in support of our colleagues.”
Decisive intervention call
In an article for The Telegraph, Jones said: “The travel industry, already on its knees following the ban on all overseas travel in April and the haphazard, last minute implementation of quarantine throughout the summer, is now bracing itself for at least another six months of restricted movement.
“Faced with the one-two punch of refunding existing bookings while new bookings were grinding to a halt, travel businesses have been left reeling.
“Every new step to limit the viral infection rate has seen the opportunity to holiday abroad disappear further into the horizon. For far too many previously successful companies, the cash has run out and tens of thousands of jobs have already been lost and with the end of furlough looming and a long, vacationless winter ahead, many more are set to follow.
“Only decisive government intervention and sector specific support will save them now.”
He added: “We need to plan for the future – for the day when we can all travel freely again – and the catalyst for that will be the same as the one that frees us from domestic restrictions; an extensive testing programme followed by the deployment of a vaccine.
“In parallel with the evolution and implementation of a nationwide testing programme, we need to use the next three months to accelerate the introduction of testing for all UK arrivals.
“However well-intentioned the use of quarantine may have been, there is no escaping the fact that it kills travel. Worse still, the use of Foreign Office advice to manage movement during a pandemic is at best inappropriate and at worst may do lasting damage to the credibility of a system that has served travellers well for over half a century.
“Winter is almost upon us, the days are getting shorter, the evenings cooler and the sacrifices greater. We all need something to look forward to, an extra incentive to knuckle down and to do what’s needed. What better than the promise of a real holiday next summer?
“It’s time to stop pretending that our overseas holidays don’t matter when they matter more than ever.
“With ambition and determination we can implement a two stage testing process for all arrivals before the winter’s out, and come January, when Christmas is done, we can all start planning and booking our summer holidays with confidence.”
Writing for Travel Weekly, Inside Travel Group director Alastair Donnelly said: “We all know that the government cannot prop up our sector indefinitely, nor do we ask it to. But it is economically short-sighted to risk letting it collapse.
“All the millions spent so far on the furlough scheme will have been for nought in terms of long-term gain. There will be no ROI on that spend. Great businesses will disappear having never had a chance to get back on their feet and be drivers of economic recovery. Potentially hundreds for thousands of jobs will be lost.”
Riviera Travel chairman Andrew Strong set out five asks of government; to extend furlough in a targeted way, extending business rate relief, extend the deferred VAT scheme, make it “crystal clear” passenger monies held by travel firms is financially protected, and support the underwriting of travel insurance.
He said: “Targeted assistance is needed so the regulated tour operator sector can survive and that consumers will be able to enjoy protected travel once the pandemic has passed. Without government support, I fear for some in our industry.
“The outbound travel sector is vital for the nation’s economy and well-being. People will need us to bring them some joy next year through delivering the holidays that we know they have been missing. A smaller travel industry puts this in peril as well as thousands of direct and indirect jobs.”
More: Comment: ‘Rishi Sunak, we need your support before it’s too late’
End of furlough could trigger industry-wide jobs hit, warn Hays Travel owners
Targeted extension of furlough scheme urged
