Furlough or Furloathe?

A total of 8.4 million jobs in the UK have been furloughed (as of 24 May), many of whom would have likely been made redundant if the government hadn’t launched the Job Retention Scheme (JRS), which currently pays 80% of employees’ wages. This has come at a cost of over £17.5 billion to the public purse and counting.

When I joined SCVO in February as the new Head of Service Delivery, little did I know that I was soon to become embroiled in the complexities of calculating furlough, the pressure of making sure people have money to survive, whilst spending endless hours on the phone to HMRC.

SCVO’s payroll service is responsible for processing more than £75 million in salaries in a typical year, plus a further £20 million in HMRC payments, on behalf of our 434 clients in the voluntary sector. When lockdown was announced in March (six weeks after I started in my role) we had to radically change our working practices literally overnight. Our small team of six FTE staff impressively transferred all of the office based processes to their own homes and adapted traditional paper based processes to digital ones. This wasn’t easy, and with the added challenge of designing a process to administer the JRS on behalf of many of our clients, and two small children needing home schooled while my key worker husband was away, I resorted to a LOT of caffeine!

By the end of May, 36% of our clients had furloughed over a thousand of their employees - which was an increase of 11% since April. The scheme, although welcomed by most, has not been the easiest to navigate. Many, including me, found the process presented new hurdles to overcome each step of the way. Calculations can be complex, particularly in the voluntary sector where people are not on static pay, or where organisations receive an Employment Allowance. And don’t get me started on pensions! Until the end of June, furloughed workers are not allowed to do any work, so volunteers are having to progress the claims, and they can’t access offices to get the paperwork needed to make the claim.

At the same time however, we were hearing amazing stories of how the voluntary sector has increased its services. Almost half of our Community Jobs Scotland employees are still able to work, either from home or by providing frontline community services, and job adverts are increasing by the day on our goodmoves website. This is proof that the sector is #nevermoreneeded in helping society recover from Covid-19.

Only time will tell if the scheme has helped what will inevitably be the worst economic crisis any of us will see in a generation. HMRC has announced that the scheme will remain open until 31 October. From 1 July, furloughed workers will be able to return to work, whilst still claiming from the scheme for the hours not worked. From 1 August, employers will be asked to pay all NI and pension contributions, and from September, they will need to pay a percentage of furloughed salary costs. We will continue to offer a service to process claims on behalf of our payroll clients, and I’m grateful for the patience and determination shown by our team members and customers. 

However reports say that one in five believe the scheme is being abused, and more than 60% of people don’t think it will be effective in helping people to retain their jobs. At the same time, 42% of businesses say they have less than six months of cash reserves, so are we just delaying the problem?