Connect with us

Business

Ditching Furlough Scheme Will Add To UK’s Economic Woes

Ditching furlough scheme will add to UK’s economic woes, warn unions and firms

Rishi Sunak’s decision to wind up the furlough scheme today will intensify Britain’s economic woes, an array of unions, business groups, employment experts, City firms and politicians have warned.

With signs of activity slowing even before pressures on supply chains began to mount over the past few weeks, the chancellor was criticised for cutting off a wage-subsidy lifeline that is still supporting well over a million jobs.

Frances O’Grady, the TUC general secretary, said the end of the furlough scheme coupled with the £20 a week cut in universal credit next week meant the government was heading into the winter with no plan to protect workers.

“Ministers should rethink the end of furlough. Many workers in hard hit industries are still furloughed and need support for longer. Otherwise, we may see a rise in unemployment,” O’Grady said.

Business leaders warned of an “autumn storm” from the government dismantling emergency pandemic support schemes at a time when the economic recovery from Covid-19 was faltering.

The coronavirus Job Retention Scheme was launched by Sunak on 20 March last year, after consultation with unions and bosses, covering 80% of a furloughed employee’s wages, up to £2,500 a month.

The Federation of Small Businesses (FSB) said the end of the furlough scheme, the scrapping of the small employer sick pay rebate, and the closure of the government’s apprenticeship incentive scheme would add to pressure on companies.

Mike Cherry, the FSB’s national chair, said: “It’s potentially a dangerous moment. As the weather turns colder, so too will the operating environment for many firms. With recent economic growth numbers having fallen below expectations, the upcoming festive season may not provide as much of a boost as hoped to many small businesses’ bottom lines.”

The government has spent around £70bn to support the wages of more than 11.6m jobs over the past 18 months, and Sunak is hopeful that a record stock of more than a million job vacancies will absorb workers coming off furlough.

However, employment experts warned this was unlikely because of mismatches between vacancies and where most workers were furloughed. One of the UK’s biggest recruitment firms said the end of furlough was unlikely to help firms address chronic staff shortages in some sectors of the economy.

Niki Turner-Harding, senior vice-president of Adecco UK & Ireland, said: “The end of the furlough scheme won’t turn the tables when it comes to the candidate-led environment that jobseekers are experiencing right now. Not least because those employees still furloughed work in industries most affected by the current situation, such as the travel industry.”

As many as 1.6 million workers remained on furlough at the end of July according to the latest official figures from HMRC, representing about 5% of the overall workforce. However, large numbers of workers in sectors of the economy hardest-hit by Covid-19 are still receiving emergency wage support from the state, with fears the end of the scheme will drive up unemployment.

Usage of the scheme peaked at almost 9 million in May 2020 during the first wave of the pandemic, and at about 5.1 million during the winter lockdown earlier this year. However, the rate of workers returning to their jobs has slowed steadily in recent months despite the reopening of the economy, as certain sectors remain under intense pressure.

More than half (51%) of all air passenger transport workers in Britain were still on furlough at the end of July, the highest of any industry. More than a quarter of travel agents and tour operators are in the same position, in a stark contrast to the 5% average for all sectors.

Christine Jardine, Treasury spokesperson for the Liberal Democrats, warned Thursday’s sudden stop could trigger an economic crisis akin to Black Wednesday in 1992 when Britain crashed out of the European Exchange Rate Mechanism. Jardine said Sunak risked a “coronavirus Black Thursday” unless he prolonged the furlough to the 10 most affected sectors.

The chancellor insisted now was the right time to close the scheme and encouraged companies to make use of other government support measures, including the super-deduction tax break and kickstart job creation scheme.

“I am immensely proud of the furlough scheme, and even more proud of UK workers and businesses whose resolve has seen us through an immensely difficult time. With the recovery well under way, and more than 1 million job vacancies, now is the right time for the scheme to draw to a close,” he said.

Susannah Streeter, senior investment and markets analyst at the wealth management firm, Hargreaves Lansdown, said: “Any hope that the end of the furlough scheme might be the magic wand to solve the supply chain crisis is likely to be wishful thinking.”

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

British Airways grounds aircraft, apologises for hitch

British Airways has grounded its aircraft at the Murtala Muhammed International Airport, Ikeja, due to a technical fault.

The airline has, however, apologised for the flight disruption.

The airline’s Regional Commercial Manager, Nigeria and Ghana, Mrs Tutu Otuyalo, told journalists on Friday that the carrier had apologised to passengers.

She said that the airline would  take up the costs of accommodation and meals for affected passengers.

Otuyalo said that the majority of passengers had been accommodated on other flights, while the carrier’s team continued to work hard to book the remaining customers on a flight as soon as possible.

“We will cover accommodation and meal costs for the customers.

“We would never operate a flight unless it is safe to do so. Most of the affected passengers have been re-accommodated to other flights.

”We have been in contact with our customers to apologise for the delay in their flight caused by a technical issue with the aircraft,” she said.

Some of the affected passengers have been endorsed on available carriers such as Virgin Atlantic and Delta Airlines.

Recall that British Airways flight number BA 74, which was scheduled to depart  Lagos for Heathrow, London, at 10.50 p.m. on Wednesday,  suffered a hitch as the scheduled aircraft developed a technical problem.

The flight was rescheduled and later cancelled due to the technical problem.

Continue Reading

Business

NERC approves N21b for purchase of meters

Govt directs electricity companies to charge Nigerians per hour

The Nigerian Electricity Regulatory Commission (NERC) has announced the approval of N21 billion for 11 electricity Distribution Companies (DisCos) to provide meters for customers.

This announcement was made in NERC’s ORDER NO: NERC/2024/072 on The Operationalisation of “Tranche A” of the Presidential Metering Initiative Under the Framework of Meter Acquisition Fund.

”The order signed by NERC Chairman, Mr Sanusi Garba and Commissioner Legal,  Dafe Akpeneye, shall become effective from June 2024 and may be amended or revoked by subsequent orders issued by the commission.

“The commission hereby approves the  sum of N21 billion apportioned pro rata to contribution by the DisCos as Tranche A of the MAF scheme.

”Attached to this order as Schedule 1 is a breakdown of the funds available for each DisCo for the purchase of end-use customer meters.

”All the meters to be procured and installed under the MAF framework shall be at no cost to the customers of the DisCos,” it said.

According to NERC, it introduced the Meter Asset Provider (“MAP”) Regulations 2018 and subsequently, the Meter Asset Provider and National Mass Metering (“MAP&NMMR”) Regulations in 2021 to address metering challenges in the Nigerian Electricity Supply Industry (“NESI“).

NERC said that the regulations provided several options for metering end-use customers but the interventions, though significant, had not resulted in the closure of the national metering gap which currently stood in excess of seven million customers.

”The inability of distribution companies (DisCos) to raise financing in the form of debt or additional equity was identified as the major constraint in the acquisition and deployment of end-use meters and other capital investments.

”The Meter Acquisition Fund (MAF) scheme was therefore, developed and approved by the commission, primarily to address the challenges of DisCos creditworthiness inhibiting the deployment of end-use meter in NESI.

”By creating a credible revenue stream from the market funds on the back of which long term financing may be secured by the utilities,” it said.

NERC said that the management of Fund Manager (FM) based on terms and conditions, negotiated by the DisCos and approved by the commission.

According to the commission, the federal government approved the Presidential Metering Initiative (PMI) with the overarching objective of closing the metering gap in the NESI within three years leveraging on smart metering technologies for data analytics.

The MAF shall form one of the revenue streams for the repayment of the long tenor financing for metering.

The order also revealed that the commission approved the deregulation of meter prices under the MAP scheme vide Order NERC/2024/040 to ensure an efficient pricing of meters while responding more quickly to changes in macroeconomic parameters.

“The order provides that all prices of meters under the MAP scheme shall be determined through a transparent and competitive bidding process by eligible MAPs.

“A competitive bidding process was held on  May 21, 2024 based on the provisions of Order NERC/2024/040 where a total of 24 ( MAPs participated across the 12 DisCos.

”A total of 44 bids were submitted for 10meters specifications,” it said.

NERC said the deployment of funds under the MAF scheme would accelerate the deployment of meters and a closure of the current metering gap.

”Thereby reducing commercial and collection losses to DisCos, enhancing quality of service and improvement of customer satisfaction,” it said.

NERC also noted that while the NESI is expected to leverage on the revenue stream under the MAF framework to raise substantial capital funding for metering, there was an imperative to accelerate a closure of the metering gap for all customers.

”Currently classified under tariff Band A for the purpose of revenue protection and facilitating demand side management for the affected customers.”

NERC said that the DisCos should utilise the first tranche (Tranche A) of disbursement from the MAF scheme based on contributions made by DisCos as at the April 2024 markets settlement.

It said that attached to this order as Schedule 1 was to procure and install meters for unmetered Band ‘A’ customers within their franchise areas.

The commission said DisCos shall, within 14  days from the effective date of the order, conduct a transparent and competitive procurement process, for meter price determination, selection and engagement of MAPs/LMMAs for the metering of end-use customer meters under the MAF scheme.

”The order also directed that a report containing details of the process undertaken for the selection of MAPs/LMMAs including meter price, meter specifications.

”And the list of customers to be metered shall be sent to the commission for approval, within 20 days from the effective date of this Order.

” Upon approval of the commission, the DisCo shall enter into contracts with selected MAPs/LMMAs on one of the following terms,”it said.

The commission said that where an Advance Payment Guarantee (APG) issued by a commercial bank in the country is provided by a qualifying MAP/LMMA, 30 per cent of the contract sum shall be paid by the FM on behalf of the DisCo to the MAP/LMMA.

” Upon execution of the contract. A further two milestone payments shall be made upon the completion of 60 per cent of contracted quantities and 100 per cent of the contract respectively, with the funds advanced against bank guarantee amortized over the payments.

“Where the MAP/LMMA do not request an advance payment, the milestone payments shall be made upon the verified installation of 20, 60 and 100 per cent respectively of the contracted volume of meters.

”A vendor may, at his option, defer payment until the completion of the installation of the contracted volumes.

“DisCos shall ensure that all the necessary resources and network clearance required by the MAP/LMMA to install meters based on installation plans are provided and/or completed,” it said.

Continue Reading

Business

Nigeria’s public debt now N121trn – Debt Management Office

exchange rate

The Debt Management Office (DMO) says Nigeria’s total public debt has reached N121.67 trillion within three months.

The Cable reports that this figure represents an increase of N24.33 trillion or 24.99 percent from the N97.34 trillion as of December 2023.

Nigeria’s public debt profile consists of the federal and subnational governments’ domestic and external debt stocks — the 36 states and the federal capital territory (FCT).

According to the DMO, the increase was primarily due to new domestic borrowing by the federal government to partly fund the deficit in the 2024 budget as well as disbursements by multilateral and bilateral lenders.

“Total domestic debt was N65.65 trillion (USD46.29 billion) while total external debt was N56.02 trillion (USD42.12 billion). Excluding naira exchange rate movements in Q1 2024, only the domestic debt component of total public debt grew from N59.12 trillion on December 31, 2023, to N65.65 trillion on March 31, 2024.

“The increase was from new borrowing to part-finance the 2024 Budget deficit and securitization of a portion of the N7.3 trillion Ways and Means Advances at the Central Bank of Nigeria.

“Whilst borrowing, as provided in the 2024 Appropriation Act, will continue, we expect improvements in the government’s revenue to enhance debt sustainability.”

On June 13, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, announced the approval of two major “financial support packages” by the World Bank — valued at $2.25 billion. In May, the Bureau of Public Enterprises (BPE) said the federal government has secured a $500m World Bank loan to boost electricity distribution in the country.

Prior to this, the federal government had received $750 million from the World Bank for humanitarian and social reforms and $1.5 billion for its economic stabilisation plan.

Continue Reading
Advertisement

Trending