Scotland’s leading food sector bodies have welcomed this week’s announcement of the Government furlough scheme extension, which will give struggling businesses “a lifeline”.
The UK-wide scheme to pay the wages of workers on leave because of coronavirus will be extended to October, Chancellor Rishi Sunak said in a surprise announcement on Tuesday.
Employees will continue to receive 80% of their monthly wages up to £2,500 with no change until the end of July, but from August the government will ask companies to start sharing the cost of the scheme, with greater flexibility to bring furloughed staff back part-time.
A quarter of the UK workforce, some 7.5 million people, are currently covered by the furlough scheme, which has cost £14bn a month.
The news of the extension was welcomed by Scottish Bakers, the association that supports bakers throughout the country, as the sector has been hard hit despite food industry employees being classed as key workers.
Chief Executive Alasdair Smith said: “The announcement by the Chancellor offers a real lifeline to many struggling small and medium sized bakery businesses throughout Scotland.
“The extension will allow businesses to more carefully plan their escape from lockdown and begin to bring back staff in a more measured way over a longer period of time. This will help them build up their capacity as demand for their products begins to recover with greater freedom of movement for our population.
“In these uncertain times, being able to plan as far forward as the end of October is a welcome extra relief for businesses as well as helping to preserve many jobs in the sector that would otherwise have been at risk.”
But despite the extension, there are concerns that some businesses will not be viable by the time they are able to re-open, even with the government help in place.
The bakery sector employs 12,000 people in Scotland, with Scottish Bakers reporting that 80% of bakery businesses have now furloughed staff with almost half of all bakery shops and all bakery cafes closed.
Similar concerns are being shared by the tourism industry, which fears that due to the seasonal nature of the sector, some businesses may not survive until October even with the furlough scheme in place.
Marc Crothall, CEO of the Scottish Tourism Alliance, said: “The Chancellor’s announcement of the extension of the current Job Retention Scheme until the end of October will offer comfort to many within the tourism industry and is very much welcomed.
“The STA has worked tirelessly to communicate the necessity for flexibility in the scheme through our daily conversations with the Scottish and UK governments.
“As always, the devil will be in the detail. Given the dependence of Scotland’s tourism industry in terms of seasonality, assurance will not be felt by all.
“There are a great many businesses that will not survive beyond October as it will simply not be viable for them to start trading again until the spring.
“Sadly, the extension to furlough alone will not be sufficient to stop many businesses from making redundancies, however, we look forward to learning more detail over the coming weeks.”
Meanwhile the Scottish fishing industry has seen some workers turn to foodbanks during the pandemic, due to plummeting demand for seafood.
Among the worst-hit are the lobster and crab fishermen in the south-east and west coasts, as well as the shellfish and whitefish fleets throughout the country.
Elspeth Macdonald, CEO of the Scottish Fishermen’s Federation, said the extension of the furlough scheme will help some individuals but added that further details were needed of the requirement for employers to contribute to the cost.
She explained: “The Scottish fishing industry has been badly affected by the Covid outbreak, with the shellfish fleet losing the vast majority of its markets. While some of the whitefish fleet has managed to continue to operate, this is at a greatly reduced level of activity in response to significantly reduced demand.
“Industry representatives have been working closely with both the Scottish and UK governments to address issues of support, both through the more general packages available to businesses and sector-specific funding from the Scottish Government to address hardship. These issues are being kept under review, and we are in frequent dialogue with both governments.
“The extension of the furlough scheme will help many individuals who are employed by businesses affected by the pandemic, although employers will need to see details of the UK Government’s proposals for employers contributing to the cost of the scheme from August.”
Scotland Food and Drink has been calling for businesses to be allowed to bring staff back part-time, and has welcomed the news that this will happen as part of the “flexible furlough” phase in August.
A statement published on the organisation’s website explained: “Major changes will be introduced from August. From then, so-called ‘flexible furlough’ will be introduced allowing furloughed workers to return on a part-time basis, something which we and many others have been calling for.
“However, employers are expected to share the cost of furlough with the government after July. How much of the furlough wages will have to be picked up by businesses is unknown.
“The Chancellor has said more information on how the revised scheme will work after July will be published by the end of May.”
