Employers of a Million People Apply to U.K. Furlough Program

Employers of a Million People Apply for U.K.’s Furlough Program

21 Apr 2020, 06:50 AM IST

(Bloomberg) --

Struggling businesses who employ more than a million people rushed to sign up for the U.K. government’s program to support furloughed workers on the first day they could apply, according to Her Majesty’s Revenue & Customs, which is administering the program.

With as many as 11.7 million employees expected to lose their jobs or be furloughed during the nation’s lockdown, concerns had mounted that HMRC’s portal would be overwhelmed and crash. Users say the platform, which opened on Monday and can handle 450,000 applications per hour, is working well so far.

The system is “simple and fast,” said Chris Adams, chief executive officer of The Dream Corporation Ltd., which owns a virtual reality bar and kitchen in East London.

His three-year-old company furloughed 27 of its 32 employees when the government ordered the closing of “non-essential” businesses on March 23. The whole application process this morning took 25 minutes and Adams was informed that his company would receive a grant to pay his employees in six working days.

“There was a lot of guidance, which gave us increasing comfort to tell team members we could claim something for them,” Adams said.

Under the program, companies can tap the government to pay 80% of the wages of furloughed employees, capped at 2,500 pounds ($3,118) per month as part of efforts to support the economy during the coronavirus pandemic. In return, companies are obliged to rehire workers once the crisis has passed and the lockdown is rescinded. The plan is designed to cover pay from March 1 through June 30.

Still, one-third of small and medium enterprises are set to run out of cash by the end of July, despite the government’s various supports, according to a survey of 500 SME owners by Critical Research on behalf of Bibby Financial Services. More than 20% said the measures have helped stave off collapse of their firms.

More than 140,000 employers had used the portal by 4 p.m., Chancellor of the Exchequer Rishi Sunak said at a press conference on Monday. The Office for Budget Responsibility, a government watchdog, estimates the job retention plan could cost about 42 billion pounds over the first three months.