Simon Palmer looks back at the extraordinary implementation of the CJRS and what we can learn from it.
The Coronavirus Job Retention Scheme (CJRS) has been a lifeline for millions of employers and employees across the UK, protecting 8.9 million jobs in the country at its peak in May 2020.
Throughout the pandemic, the rapidly changing situation has resulted in emergency legislation such as the CJRS, which usually takes years to implement, being rolled out in a matter of weeks.
While of course imperative, this has resulted in concerns around exclusions, fraud and human error, with both business owners and accounting professionals navigating new legislation and taking on new obligations overnight to ensure claims were paid.
With the CJRS scheduled to end on 31 April 2021 and the vaccine rollout giving hope to an end of the third and likely final lockdown, what can we learn from the scheme?
The CJRS in numbers
Before it was announced by the government on 20 March 2020, furlough was an alien concept to payroll providers, businesses and accountancy professionals.
However, it quickly became a lifeline for businesses, covering up to 80% of an employee’s wages. The term ‘furlough’ joined ‘Zoom’, ‘lockdown’ and ‘social distancing’ as phrases synonymous with the pandemic in the UK.
Within just three months, the CJRS was being utilised by some 1.1 million employers to cover 8.7 million jobs, at a cost of £17.5bn.
Subsequent lockdowns and the introduction of flexible furlough options have meant the scheme is still heavily relied upon almost a year on, with the hospitality sector having the highest number of employments furloughed at the time of writing.
The latest provisional estimates from HMRC show that the total number of employments furloughed on 31 December 2020 was 3.8 million.
Action on fraudulent claims
The impressive speed of the rollout, implementation and mass adoption of furlough has, of course, left scope for abuse and exploitation of the system.
Stories of employers claiming furlough for employees who are still working or employees receiving furlough payments for jobs they no longer work at, have garnered widespread media attention.
As the dust settles, HMRC has begun to ramp up investigations into abuses of the CJRS, with a dedicated form to report suspected foul play. In January, the number of reports being handled by HMRC increased to over 21,000.
In a more dramatic move to discourage fraud, HMRC is publishing the details of employers claiming furlough from 1 December 2020 until the scheme is set to end on 30 April 2021.
Employees will also be able to check whether their employer has claimed furlough for their wages from February 2021 through their Personal Tax Accounts, allowing them to quickly identify whether furlough has been wrongly claimed and in theory ‘shop’ their employee to HMRC.
Correcting human error
With the onus of organising furlough schedules falling on business owners, a proportion of incorrect furlough claims will of course be down to human error.
The introduction of ‘flexi furlough’, while extremely convenient, has exacerbated this issue – with furlough reclaims now often unique to each employee down to the individual hours they have worked throughout the period in question.
Throughout the pandemic, businesses have largely been responsible for managing and calculating furlough hours, with accountants and payroll providers simply processing the data they are given.
Our experience has shown that there is a disconnect in the expectation of responsibility for some businesses, who feel that their accountant or payroll provider is responsible for the accuracy of the data submitted to HMRC. However, this is not the case; providers can only work with the data they are given.
Thankfully, there is recourse available for businesses who have made a mistake on their claim while the scheme continues, in that they can take into account errors in previous claims when submitting the current one. However, with the scheme about to end, time is running out for any oversights to be identified and rectified.
With the vaccine rollout on track to meet government targets, it would come as a surprise to many in the industry if the furlough scheme in its current form was extended any further than the planned end of 31 April 2021.
Unfortunately, many of the businesses who are currently operating at a fraction of pre-pandemic levels will struggle without the CJRS and we could see an increase in redundancies as the support is withdrawn.
While the future of government support is not yet known, we could perhaps see previous iterations of the scheme be reintroduced, or targeted grants and support schemes made available to industries and businesses that are still feeling the effects of the pandemic.
What can we learn?
Taking from the positives of the CJRS and learning from the negatives through hindsight will play an important role in shaping the success of government and industry response to any similar events in the future.
Perhaps the most notable positive was the flexibility that has been shown by cross-party legislators and the commitment from HMRC, business leaders and finance professionals to collaborate. This should be a cause for optimism when anticipating other large changes coming to the industry.
From our experience, we have seen an increase in demand for cloud-based payroll software with features such as digital payslips as businesses undergo digital transformations to enable remote working.
Additionally, the reliance on accountants and payroll professionals throughout the pandemic has perhaps put a renewed focus on outsourcing, with many businesses now realising its benefits and seeing professional support in the areas of payroll as essential.
• Simon Palmer is Sales & Marketing Director at Qtac