Financial speed

Many good businesses at risk of insolvency unless access to finance is sped up – REC tells government.

The government must speed up the availability of financial support for businesses or hundreds risk becoming insolvent, damaging the jobs market’s ability to recover, according to the Recruitment and Employment Confederation (REC).

In a letter to the Business Secretary, Alok Sharma, the REC warned that many businesses in high cashflow, thin profit margin sectors – like recruitment and staffing, but also hospitality and retail – will not be able to furlough temporary staff knowing that support payments won’t come through until May

The REC has suggested four solutions to help workers, companies and the government alike during the present crisis:

  1. Allow high cashflow businesses to claim emergency grant support for wages now, which is then deducted from furlough payments when they become available.
  2. Ensure that banks and insurance providers play fair and provide the necessary support quickly, without making unreasonable requests from businesses or seeking to wriggle out of payments on technicalities.
  3. Government to cover Statutory Sick Pay costs for 2 weeks for all workers, regardless of the size of the business or whether the employee is temporary or full-time, so that hirers and agencies can place temporary workers with confidence.
  4. Find a way to support directors of owner-operated limited companies who have largely been left unprotected by the government’s measures so far.

Neil Carberry, CEO of the Recruitment & Employment Confederation (REC), said:

“The way businesses, trade unions and government have come together during this crisis has been exemplary. But time is now running short for too many good businesses – and any failures over the next few weeks will damage the jobs market’s ability to recover.

“Government needs to understand that those with weekly payrolls are struggling more than the rest of business – not everyone is paid monthly. Recruiters have a huge role to play in helping staff key industries and find people new jobs as we recover from this. But many such businesses operate on a high cashflow, low profit margin basis. They cannot wait months for support.

“Getting financial support to where it is needed, quickly, is vital. This means ensuring banks and insurance providers play fair. It means helping high-cashflow businesses with emergency funding which can be paid back when furlough payments come through. This does not mean higher costs to the taxpayer. It’s about bringing forward support that is urgently needed now so that businesses are in a better place to support the economy when the country comes out of this crisis. This will help businesses, workers and the government in the long-run.”

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