Industry leaders have raised concerns the government’s new Job Support Scheme will not save travel jobs.
Chancellor Rishi Sunak’s scheme states if employees work at least a third of their normal hours the government and employers will then increase those wages, covering two thirds of the pay they have lost by reducing their working hours.
Giles Hawke, chief executive of Cosmos Tours and Avalon Waterways, said: “It’s great the government are trying to do something, but my early read on this is that businesses will have a minimum of 55% of costs of any employee, and that is based on them doing 33% of their hours, so we lose out on terms of productivity and employees lose out on earnings.
“It seems a bit of a lose-lose situation as I read it from a first look.
“I’m looking for the upside and keen to understand what I have missed in this, but I can’t see how it will retain jobs – if a business was thinking that they can’t afford to keep an employee on, even on reduced hours or salary, then having to pay at least 55% of that salary when the business may have been planning not to have that salary cost at all will not mean jobs are retained.
“On first reading and initial understanding I don’t think it will be of great help to travel businesses where limited revenue is coming in and prolonged Covid 19 measures are likely to mean that will continue to be the case.”
Julia Lo Bue-Said, chief executive at Advantage Travel Partnership, agreed the announcement was lacking.
“Following today’s update from the Chancellor, it does look as though there are elements to the government support that will benefit employees, however it does look less attractive for businesses and raises the question of whether this will actually help prevent redundancies.
“From the plans outlined, if an employee is working a third of their hours, businesses would be paying 55% of their wage for only 33% of their time, with the government then contributing another third towards their salary – which is not sustainable for businesses.
“What’s more, many firms within the travel industry will have already initiated, or completed redundancy consultations with their staff already following months of little to no revenue being generated.
“We understand blanket support like the furlough scheme cannot continue, but we have been calling on our government for sector-specific support for months now, and in order to protect travel industry jobs in the long-term, we must be able to book and sell holidays.
“The only way to do that is to improve consumer confidence and we believe securing the government’s support on testing at ports of entry would be a viable option.
“Testing on arrival and then again five days later would help to reduce the length of quarantine which is causing so much anxiety for consumers and ultimately loss of revenue for travel agents and the wider industry.
“British jobs depend on the government to act swiftly and consider the grave economic impact if the issue of testing is delayed further. We await further clarification and details on the scheme that are due to follow next Tuesday.”
Unless I have missed the point this latest announcement from @RishiSunak does nothing to help business. In essence pay more to staff for working less hours. This is underwhelming and will not stop the very sad jobs car crash. Vs offerings in France and Germany it is very weak.— Miles Morgan (@MMTMan) September 24, 2020
Chris Galanty, chief executive corporate travel at Flight Centre Travel Group, also lamented a lack of sector-specific support.
“We welcome the news from Rishi Sunak that the government is launching the Job Support Scheme, and the cancellation of the VAT increase for the hospitality and tourism industry that was planned for January. However, this is little reprieve for the travel industry – both business and leisure travel – that has been hit so hard by this pandemic.
“We are disappointed that the government has not announced more targeted support for the sector. Many jobs have already been lost and, if urgent action isn’t taken, many more are likely to go.
“At Flight Centre we have not seen a material shift in revenue since the crisis began and as a result we announced in July that around half of Flight Centre Travel Group’s valued UK employees will be made redundant.
This, coupled with Flight Centre retail store closures up and down the country, was devastating which is why we need to act now in order to save more jobs, and save the travel industry.
“To get travel, and the economy moving, the government needs to agree consistent standards and transparent guidelines for travellers. More specifically the UK government should heed the call from airports and airlines to introduce testing on arrival – a model that is working successfully at many airports around the globe, such as Frankfurt, Amsterdam and Dubai.”
He added his belief that the government should consider exempting business travellers from quarantine completely “as their risk of contracting the virus is extremely low”.
“Trips are planned meticulously as employers are responsible for their business travellers’ safety,” said Galanty. “Travel policies stipulate which airlines and hotels can be booked based on hygiene and cleaning protocols.
“Leisure travel from the UK to countries all around the world has almost ground to a halt. Whilst business travel is picking up, according to our recent customer research, only a quarter of companies plan to return to pre-Covid levels of UK domestic travel in 2021, and our customers still have long-haul business travel plans on hold indefinitely.
“The ongoing impact of the pandemic is causing great anxiety for our customers, our people and our business, and is clearly having a massive impact on the UK economy.
“In the UK, business travel is critical to the economy, contributing around £220 billion in GDP in 2019. Business travellers get the deals done and build relationships which drive global trade.
“That’s going to be even more vital not only in rebuilding the British economy post-pandemic, but also post-Brexit.”
Clive Wratten, chief executive of the BTA (Business Travel Association), added: “We welcome the Chancellor’s ongoing support through the measures announced today.
"The Job Support Scheme will help temper the level of redundancies in our sector, but, it will still place a huge financial strain on businesses currently seeing a catastrophic drop in demand.
"It will not kickstart business travel, a vital enabler of the British economy. This requires urgent action on quick testing at departure. Only this will ease the burden on an industry ravaged by Covid-19.”