Recruitment industry welcomes latest #Coronavirus package from Chancellor, but more needs to be done

According to a letter sent to the Prime Minister earlier today (17 Mar), the government should further enhance state support to cover the cost of Statutory Sick Pay (SSP) for all businesses regardless of staff size. This should cover absence for up to 14 days. Many businesses, for example recruitment agencies, are small firms, with few operational staff, but can have many thousands of agency staff on their books who are currently not eligible for government support. 

The REC is also calling on government to help businesses by offering greater flexibility in the timescale for paying VAT and PAYE, and by deferring the upcoming IR35 tax reforms which were already putting a strain on employment businesses. The REC welcomed the Chancellor’s announcement on the loan scheme which it had previously called for.

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

“Coronavirus is putting enormous strain on good businesses and many are facing major cash constraints, putting tens of thousands of jobs at risk. We welcomed the support offered by the Chancellor last week and today’s announcement on the loan scheme will help businesses defer some immediate costs to see them though in the short-term. 

“We ask the government to provide support to cover the cost of Statutory Sick Pay (SSP) for all businesses regardless of staff size. We are also asking that they allow for flexibility in  VAT and PAYE payments, and suspend the upcoming tax changes until normality resumes. This will help to keep people in their jobs and allow firms to start hiring again. In return, businesses must also take a proactive approach to protecting their staff and preparing for a future where we will all have to be more flexible about the ways we work.”

On Friday 13 March the REC conducted a poll of recruitment agencies, asking “Looking ahead, how will the coronavirus crisis impact on hiring activities in the short term?”

1. It will have a major adverse impact – 35%
2. Some adverse impact but manageable – 55%
3. No real impact – 3%
4. Will increase demand for staff – 8%

Letter in Full

Dear Prime Minister, 

I am writing to offer our support to the government as it leads the national response to the COVID-19 Coronavirus outbreak – and to seek your support in helping good businesses navigate the cashflow constraints of the next few weeks and months.

The REC is one of the country’s largest business groups, representing 3,300 companies and 10,000 individuals who, collectively, place one million people into new jobs every year, and a million temporary workers into workplaces every day – including critical staff in health and social care. We have already seen the huge impacts that this period is having on our jobs market and without sensible support from the government, the capacity of our sector to help deliver a jobs recovery will be damaged.

 We are happy to help by:

• Convening any necessary discussions with staffing suppliers to the NHS, social care and education systems. We have always argued for a strong partnership between the government and the public sector, based on delivering the best for patients and students. Now is the time to work together in the interests of all our people. Sensible steps can be taken now to ensure a smooth and efficient operation of staffing over coming weeks – including online rather than in-person right to work checking, and a more inclusive approach to agencies and banks meeting the needs of the public sector, with high standards of cost and quality control.

• Enhancing support for those who lose employment opportunities. The REC has a long-standing partnership with DWP designed to improve co-ordination between private sector employment agencies and Job Centres in ensuring that people can find work effectively, most recently used in the aftermath of the Thomas Cook collapse in September. Given the likely economic impact of the current crisis, we anticipate needing to work closely with you again.

There may be other ways in which we can help, and we stand ready to do the right thing for the country at this critical time. 

In the very short-term, however, recruitment firms are being affected by the chilling effect on the economy of the steps necessary to battle the virus. Good businesses are being put at risk by the short-term cash constraints caused by a sudden drop in private sector activity. This ought to be a bubble – but action is needed to make sure businesses can survive until the bubble bursts.

We welcomed the additional support offered to businesses by the Chancellor last week, but It is now clear that this is not sufficient. Further enhancement of state support on SSP costs for all employers is essential – up to 14 days. At the very least, the government needs to confirm that the small business support set out by the Chancellor last week applies based on the Companies Act 2006 definition, which would not include temps placed in client companies in deciding whether a small employment agency was eligible for support in paying SSP to both their own staff and temps.

Secondly, government must act swiftly to ensure cash reserves in businesses are maintained though this period. Relief on payment timescales for VAT and PAYE revenues, targeted loans and deferral of cash disruptive April reforms like IR35 are all vital to our industry being able to deliver for workers and businesses after the crisis has passed.

We are ready to discuss any of these points with your team. This crisis will pass, and we want to make sure recruiters across the UK are able to get Britain back to work when we’re needed.

Yours aye,

Neil Carberry, Chief Executive, Recruitment & Employment Confederation