2:45 pm, May 12, 2020
Mass redundancies in the car industry may have been averted thanks to the government’s announcement the furlough scheme will be extended.
The chancellor Rishi Sunak told the House of Commons today that the furlough scheme would be extended until October, with employers contributing more towards the 80 per cent funding for staff’s wages from August.
Car dealers had feared that they would not be able to take all their staff back when they are only set to be allowed to open their doors from June 1 – and even that date isn’t certain.
Yesterday, the government announced that non-essential retail will have phased reopening from June 1, but it is not yet clear whether car dealers will be included in that.
An announcement by the SMMT or NFDA as to whether dealers will be included has been noticeable by its absence. As yet, no statement from either trade body has been issued on their thoughts on the government’s proposals.
However, dealer bosses will be breathing a sigh of relief after the chancellor’s announcement today as many had already begun mass consultations with staff over redundancies.
Accountant David Kendrick from UHY Hacker Young said: ‘This announcement has to be good news for the sector.
‘Many of our clients were considering staff levels and potential redundancies at the end of June if furlough ended as the sales side of the business is very unlikely to be operating on full capacity for the foreseeable future.
‘The extension means that jobs are protected and while I am sure that people being based at home will start to want to return to a normal working routine, their incomes are protected for the summer.
‘More details are due out over the coming days and let’s hope that come June 1, there is some good showroom traffic to allow these businesses to rebuild.’
Robert Forrester, CEO of Vertu Motors has been busy bringing staff back from furlough already – announcing a few weeks ago that 1,000 staff had been bought back to work.
But he told Car Dealer today: ‘I would prefer a business that makes money from trading than reliant on government handouts.’
Chancellor Rishi Sunak told parliament this afternoon that further details on how the part-employer funded furlough scheme will work will come at the end of the month.
[Rishi in Commons, 1:46 video]
He said: ‘From August to October the scheme will continue, for all sectors and regions of the UK, but with greater flexibility to support the transition back to work.
‘Employers currently using the scheme will be able to bring furloughed employees back part-time.
‘We will ask employers to start sharing, with the government, the costs of paying people’s salaries.
‘Further detail will follow by the end of May, but I want to assure people one thing won’t change: Workers will, through the combined efforts of government and employers, continue to receive the same level of support as they do now, at 80 per cent of their salary, up to £2,500.
‘It’s crystal clear that those on the scheme have that reassurance – the level of support that they receive will not be changed.’
Sean Kelly, MD of Vines BMW, said he would rather have had some clarity on when he could re-open, but was pleased with the news on the furlough scheme extension.
He said: ‘I think it was better than first anticipated.
‘By any measure an extension to the scheme is good news in the round, the best news would be some clarity on full reopening dates though.
‘The cliff edge has definitely moved backwards, and even awaiting the details of the part-time / employer contribution proposals, there is some certainty until the end of July earliest for all dealer staff on furlough.
‘We need to reopen and be able to ascertain the level of “new normal” trading before we can plan too significantly on staff required and the balance of part-time / shift patterns.’
Government furlough scheme extended to October, 80 per cent of wages covered and part-time allowed
June 1 date for car dealerships to reopen as they’re left off list in new government guidelines
More: Furloughing and commission – Everything we know so far
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