Delays in assessing furlough cash claims are putting Scottish jobs at risk, it has been claimed, with some firms still waiting to access vital support months after first being approved for the scheme.
Businesses say they have been forced to pay staff out of their own pockets while struggling to make ends meet, and one major employer in Dundee admitted his firm has been forced to consider redundancies despite being approved last year.
It comes as hospitality bosses warn some employers are paying more than double into the Treasury through National Insurance than they are receiving back in financial support grants set up to help them survive the coronavirus pandemic.
Dundee West MP Chris Law has written to Jesse Norman, financial secretary to the Treasury, to seek urgent answers after calling for a debate on the delays at Business Questions on Thursday.
Mr Law raised the case of Jimmy Marr, whose business, The Perth Road Pub Company, has been left without furlough support for around 30 staff while HMRC investigates the failure to pay out an approved claim to the business in December.
Firms are unable to apply for additional furlough payments while investigations are ongoing, and despite initial promises that all matters would be completed within 15 days, HMRC has now said it could take up to 40 days to be resolved.
The businessman, and former Dundee FC owner, was forced to contact employees last week and explain that, without ongoing furlough support, he may need to consider cost-cutting measures and redundancies.
‘I am devastated and heartbroken’
Mr Marr said: “The hospitality sector has been one of the hardest hit over the last year, and my business has been just one of the many affected.
“We were able to pay our staff up until last Friday, despite our furlough claim being suspended, but with no income coming in this has been unsustainable and I am devastated and heartbroken to have been forced into the position where I cannot afford to pay them from this week.
“Many of my staff are long-term employees and I feel deeply for the situation they are now in through no fault of their own. HMRC promised to have this resolved as quickly as possible, yet over a month and a half later we are still waiting.”
‘This is simply unacceptable’
Mr Law wrote to HMRC after being contacted by Mr Marr but has yet to receive a detailed response to his concerns.
He said: “HMRC promise that furlough claims will be processed quickly and efficiently, yet Mr Marr has been left waiting since mid-December. This is simply unacceptable.
“Business owners across our city and the country are acting responsibly by following necessary restrictions, but for those in the hospitality industry this severely hampers their income.
“Furlough was introduced precisely for this reason, so that otherwise successful businesses could survive lockdown and restrictions and employees could continue to be paid.
“I am extremely disappointed that Mr Marr, his business and his employees have, in effect, been left stranded over the last two months, and I hope that HMRC will now reach a quick resolution.”
An HMRC spokesman said it cannot comment on identifiable individuals or businesses but in some cases payments may be withheld “while we carry out required checks, which we endeavour to complete as quickly as possible”.
Leader of the House Jacob Rees-Mogg told Mr Law he would take up the point with ministerial colleagues to ensure Mr Marr’s issue is resolved “as swiftly as it may be”.
Meanwhile, the Scottish Hospitality Group has called for furlough to be improved after it emerged its members are, on average, paying around £150,000 a week in National Insurance (NI) contributions while receiving just £66,000 a week in financial support.
Spokesman Stephen Montgomery 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.”
The call comes as a report covering the whole of the UK shows the hospitality sector is forking out £542 million a month in support of the furlough scheme.
The figures are based on analysis by Catton Hospitality’s labour-scheduling management system, S4Labour, which stated “it is clear furlough is not the free lunch it is sometimes portrayed as”, and that retaining staff “comes with a cost and it is no insignificant amount”.
The group, whose members employ more than 6,000 people, has also finalised its manifesto for how the government and industry can work together.
Key demands include waiving business rates until at least March 2022, supporting a permanent reduction in the VAT rate to 5% on food services and accommodation, and introducing specific grant schemes to help the hardest-hit sectors, especially drink-led venues, nightclubs, and wedding venues.
The Treasury was approached for comment.