Chancellor’s jobs scheme ‘impossible to justify’ for many travel companies
This article was first published in Travel Weekly on Friday 25 September.
Abta’s director of public affairs, Luke Petherbridge, says government must make progress on regionalising quarantine and introduce testing to boost consumer confidence in travel.
It is often the case in policy announcements that the devil is in the detail. That is certainly true of the chancellor’s new Job Support Scheme, announced yesterday as part of the Winter Economy Plan, which followed confirmation that the Autumn Budget had been postponed in the wake of growing concern about a resurgence in Covid-19.
Any job support scheme is better than none, which had been the government’s stated intention from the end of October when the furlough scheme comes to an end. As part of the Save Future Travel Coalition we have been pressing the government for ongoing salary support, and while it is good to see the government take action in this area, we will be following up with HM Treasury to continue to campaign for specific travel sector support, as some businesses will undoubtedly be left behind.
Under the scheme firms will be required to subsidise those hours not worked by their employees – with companies proportionally required to pay more the less work they receive. Many travel companies are likely to find this impossible to justify based on current trading conditions. As a result, while some roles may be saved, many more could be lost in the coming weeks.
Elsewhere, the extension of many business support measures is welcome, and is something Abta has been calling for in our lobbying work. Additional time to repay the government-backed loans and VAT deferrals offered in the early stages of the crisis will provide much needed breathing space for many travel companies, and is recognition that the rise in Covid-19 infections across the UK is likely to prolong recovery across the UK economy well into next year.
In addition, the extension of deadlines to apply for many of those loan schemes, including CBILS (Coronavirus Business Interruption Loan Scheme) and Bounce-back loans, and the announcement that a new regime will be forthcoming in January, is also good news, which will enable many businesses to reassess their needs.
There are notable gaps in provision, however, including the lack of any new grant schemes, which are much needed as an alternative to additional borrowing, especially amongst small and medium-sized enterprises and for those parts of the industry that are yet to resume operations.
What travel businesses need more than anything is for people to feel confident enough to travel again, and here policy decisions to manage the pandemic have proven challenging.
The government’s lack of transparency and frequent changes on quarantine policy, and the failure to introduce a testing regime as an additional mitigation measure, has undermined consumer confidence over the summer months, ripping away the nascent recovery the industry had experienced in early July.
We now need the government to take urgent action on these areas. Other countries, including Germany and the Netherlands, already operate fully regionalised approaches to their own quarantine regimes, including for mainland areas, and many countries have introduced testing to reopen travel to a greater number of destinations. An APD (air passenger duty) holiday would also help to incentivise people to book their next holidays.
The more people are booking and travelling on holidays, the more viable the chancellor’s job support scheme becomes.
Abta will continue to work with our industry partners to apply pressure on government for progress on quarantine and testing policies. Greater certainty for travellers is critical to the recovery of travel.
Following months of policy decisions that have shaken confidence, and depressed demand, the government must now work with the industry to take the steps needed to put travel on a firmer footing for the winter and into next year.