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Furlough costs on-trade £542m a month

Employment payments on top of the UK government’s furlough scheme cost the hospitality sector £542 million (US$742m) every month, according to a new report.

Payments for National Insurance, pensions and holidays cost venues £3,738 per month

Catton Hospitality, which produces scheduling management system S4Labour, found the combined cost of National Insurance, holiday and pensions for hospitality businesses is worth £3,738 (US$5,118) per venue, per month.

As such, the total monthly bill for such costs, which are not currently covered by the UK government’s furlough scheme, is £542m.

The report also warned that as businesses claim back their wage payments through the furlough scheme, venues are “constantly out of pocket”.

Rob Pitcher, chief executive of Revolution Bars, said the scheme, while welcome, has cost the business £1m (US$1.4m) at a time it has seen revenue vanish.

Sam Wignell, chief customer Officer at S4labour, said: “With the current levels of government support, businesses are going to run out of cash before they get the opportunity to reopen. The true cost of furlough is much higher than one might imagine.”

‘Running out of cash’

A report from trade body the Scottish Hospitality Group (SHG) also found furlough payments were worth less than half of what businesses pay in National Insurance.

According to SHG, its members pay on average £150,000 (US$205,000) per week in National Insurance contributions, but receive £66,000 (US$90,000) a week in financial support from the government.

Stephen Montgomery, spokesperson for SHG, said: “It is complete madness that there’s a whole bureaucracy set up to move money around like this to no-one’s benefit. We suspect that most of the public have no idea that furlough actually costs businesses a lot of money. It is certainly not free.

“If you think of furlough as being the roof of a house, unless there is a secure foundation below, the roof will collapse. With hospitality shut since the end of December, businesses are running out of cash to plug the gap and sooner rather than later they are going to have some difficult decisions to make.

“It would be far more efficient and beneficial to waive NI contributions and for the government to develop a sensible and long-term sector-specific furlough scheme.”

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