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Begbies Traynor comment on the government’s Winter Economy Plan

Julian Pitts, Begbies Traynor regional managing partner in Yorkshire, said:

“Amid difficult circumstances, the Chancellor was under pressure to bridge the gap and avoid a cliff edge once the furlough scheme ends. On the face of it, this new package of measures provides a helping hand to get people back into the workplace on reduced hours. However, the lion’s share of responsibility now shifts to the employer who will have to find 55% of an employee’s pay for working just one third of their usual hours.

“The proposals are clearly designed to support viable jobs and businesses, but will pull the rug from under so-called ‘zombie’ companies. It remains to be seen if it is enough to safeguard viable jobs and stem the tide of inevitable redundancies.

“The pressure on businesses is coming in waves, as government measures are withdrawn or reduced. The extension to loan repayments and extension to VAT payment deferrals will therefore be welcome, but the fact remains that at some point the debts and VAT deferral need to be repaid and that will be especially difficult for many businesses that are still struggling to reach pre-pandemic activity or that are subject to ongoing local lockdown restrictions.

“Perhaps there will be more detail to come, but we didn’t hear too much for those who have already lost their jobs in the form of skills and training packages. This is vital for the long-term health of the economy.”