By William Schomberg
LONDON (Reuters) – Two thirds of British firms taking part in a survey have asked for public money to pay staff they have temporarily laid off, pointing to a strong take-up for a key part of the government’s plan to soften the economic impact of the coronavirus.
The scheme was the most widely used of a string of measures to help companies through the economic shutdown, with 66% of firms who responded to the survey saying they had applied, the Office for National Statistics said.
Under the Coronavirus Job Retention Scheme, which is central to efforts to slow a rise in unemployment, the state pays 80% of workers’ pay up to 2,500 pounds ($3,119) a month.
On Monday, finance minister Rishi Sunak said half a million firms had applied for help paying the wages of around 4 million staff at a cost of 4.5 billion pounds.
The ONS said its April 6-19 survey was based on responses from 5,158 businesses, or 29% of the total number of firms it approached. The results were not weighted to be representative of all employers.
A separate survey published on Wednesday showed 76% of member firms of the British Chamber of Commerce, which are typically small, had furloughed some of their staff under the scheme, and almost none had made staff permanently redundant.
The scheme is due to run until the end of June and is likely to cost the public finances around 39 billion pounds, based on an assumption that 30% of employees are enrolled, Britain’s official budget forecasters said on Thursday.
Rob Wood, an economist with BofA Securities, said continuing the scheme until the end of this year could be needed to avoid puncturing an economic recovery after the lockdown.
“Ending the scheme in June as planned would cause a large shock in the third quarter,” he said in a research note. “The Job Retention Scheme would then just delay, not prevent, unemployment rises.”
The ONS said 56% of businesses that responded to its survey had asked to defer value-added tax payments to the government, another part of Britain’s coronavirus economic plan.
One in four businesses that were continuing to trade reported that turnover had fallen to less than half of normal levels while 30% said it was unaffected.
The proportion of companies that had closed temporarily or paused trading remained at about one in four, similar to an ONS survey two weeks ago.
Another part of the government’s strategy – offering state-backed loans to companies – has made less progress.
Data from a finance industry group showed government-backed bank lending to small and medium-sized businesses rose to 4.1 billion pounds by April 28, up from 2.8 billion pounds the previous week.
(Writing by William Schomberg and David Milliken; Editing by David Goodman and John Stonestreet)