Comment: The fears when job retention scheme comes to an end

Job losses across the West Midlands are inevitable when the Government’s furlough scheme finally comes to an end in September.

Many firms in the region may be forced out of business by the costs faced from staff coming back en masse on top of having to start to service some of the big loans they have taken out.

And insolvency firm Red Flag Alert estimates that 274,720 jobs are at risk of being lost following the end of the furlough scheme.

Johnathan Dudley, Midlands managing partner of audit, tax and advisory firm Crowe, said that figures for the Black Country, Staffordshire and Shropshire suggested just over a third of those first furloughed at the start of the coronavirus crisis in the region are still covered by the scheme.

Mr Dudley, based at Crowe’s Oldbury office, said: “Furloughing has been really helpful for a lot of businesses and helped them buy the time to make necessary decisions. Crowe has been saying almost since the start that this process presents opportunities for businesses as well as threats and the smart businesses have been planning to get back on a new and safe track.”

He said smart businesses had been working for months to repurpose for the new post-Covid era adding: “Sadly that will involve some people no longer having a job or having different jobs going forward to the ones that they had previously.”

Furloughing has been very useful to a lot of businesses to put things on hold, but there were a lot of businesses which will suddenly find themselves short of cash when they find themselves paying back some of the £75 billion coronavirus debt which obviously will start in principal once the anniversary of the first CBIL and Bounce Back loans arrives.

Julia Fitzsimmons, partner and head of the employment law and human resoures team at FBC Manby Bowdler which has branches across the region, said: “The furlough scheme has undoubtedly protected millions of jobs in the UK and tens of thousands across this region.

“But behind every job is a person, someone with mortgages and rent to pay and families to feed. The issue will be what happens to these jobs once that support, which is a huge sticking plaster, is ripped away. The way people are working has changed, in some cases, companies have closed offices which means the job might be lost along with the desk or the office.”

John Merry, head of employment at Lanyon Bowdler, said: “It is far from the case that every instance of furlough represents a job saved that would otherwise have been lost.”

However, he added: “It is undoubtedly the case that a large proportion of furloughed employees who have been retained would otherwise have been dismissed. It will be a great benefit to businesses to be able to bring back trained and experienced staff from furlough.”

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