Furlough was a terrible mistake that’s destroyed our proud British work ethic

THE request seemed simple. With Covid now behind us, would a senior headoffice manager of one of Britain’s biggest hospitality firms please return full-time to the office rather than spend Mondays and Fridays working from home?

I was staggered by the reply. ‘I feel as if I’m being bullied,’ the manager had said, seemingly oblivious to the fact that tens of thousands of the company’s employees, from bar tenders to hotel cleaners, were hard at work from early in the morning to late at night.

Thankfully, the delusional manager wasn’t on my payroll, but I heard this cautionary tale from a business rival as we swapped stories on how desperate the labour market has become since Covid.

As a businessman with 1,000 employees in the hospitality sector, I despair at the effect recent events have had on the attitude of many in the workforce today.

A huge proportion of hospitality staff did not bother going back to their jobs after they had effectively been paid to sit around and do nothing for the best part of two years under the Government’s £70 billion furlough scheme.

Commit

Meanwhile, many of those who did go back decided they no longer wanted to work fulltime. And in my own companies’ experience, fewer of our young new recruits want to commit to full-time work — perhaps because, instead of attending lessons and lectures at school and university, many either studied at home or in their digs during lockdown.

So I find it unsurprising that a study released this week by the Bank of International Settlements (BIS) has found that Britain has a major economic problem caused by a shift in people’s approach to work.

Fewer Britons have returned to full employment than workers in other countries, and those who have returned work for fewer days than before.

It’s no surprise either that the BIS concluded that countries such as Britain, the U.S. and Canada, which had the most generous furlough schemes, also have the biggest problem in dragging people back into the office.

And, my goodness, was our scheme generous. The £70 billion spent during the furlough scheme should be put into context. Rishi Sunak’s Government has said £20 billion, for instance, is being set aside to rebuild five major hospitals and to spend on new NHS infrastructure.

Meanwhile, it cost the Ministry of Defence a comparatively mere £6 billion to construct two aircraft carriers.

What is so astonishing is that, in lavishing this £70 billion on furlough, those running our economy have overturned that truism of human nature: we need financial incentives to motivate us to work, which patently makes it absurd to pay people to do nothing at home.

In Britain, we pride ourselves on a north European work ethic, a Victorian drive that administered an empire.

‘If you work hard, you’ll get on in life,’ has been a simple maxim passed on to children from generations of parents for hundreds of years.

Career progression brought better pay, a fancier job title and greater satisfaction. This was the ‘carrot’ while the ‘stick’ was the threat of penury, or at least limited means and a lower standard of living.

And these twin motivations have been crucial to economic success in Britain and the U.S., the Anglo-Saxon powerhouses of capitalism, for the past two centuries.

But the furlough scheme turned the idea of incentivising people on its head. No longer are we a hard-working nation of shopkeepers who get up at the crack of dawn.

Today, there’s a ‘back in 15 minutes’ sign on the shop door as we struggle to reignite our passion for work.

Between March 2020 and September 2021, the Treasury furloughed nearly 12 million people on 80 per cent of their wages — essentially forcing them to sit at home at the taxpayer’s expense [it wasn’t an option for hospitality to stay open; we were compelled to close and send staff home].

Some people used the furlough scheme to gently slide into semi-retirement. Others moonlighted with secret second jobs. But many more simply took the money not to work — and got used to it.

Measures such as working from home became difficult to reverse because a perk of employment quickly becomes an entitlement.

Vacancies

To anyone struggling to run a business since Covid, this principle of entitlement is painfully plain. It’s only now that the world’s central bankers are catching up.

‘Workers’ preferences have shifted in favour of fewer working hours,’ the BIS report says. ‘Since the pandemic . . . the unwillingness to work has been most pronounced in countries such as Britain that gave the biggest handouts.’ You don’t say!

While there are a million unfilled vacancies in Britain, the latest figures show that a quarter of working-age people are economically inactive — that’s people who neither work nor seek employment. The figure remains stubbornly higher than pre-Covid levels.

Chancellor Jeremy Hunt this week acknowledged the problem, introducing tough new welfare reforms to encourage people back into work.

He also compared Britain’s ‘ participation rate’ — the proportion of people in work — unfavourably to the Netherlands during a thinktank event this week.

‘If we had the same number of women in work as in Holland, relative to the size of population, we would have two million more people in work in the UK so we would have filled every vacancy in the economy twice over,’ he said.

Large numbers of those who are not working comprise the 2.6 million people who are on long-term sick leave — many with mental health issues.

Needless to say, these people do not contribute anything to the nation’s productivity and have to be paid for by those who actually do work.

To me, it shows that lockdown and the generous furlough scheme that accompanied it were a huge mistake.

Of course, given the draconian response to the pandemic, support was needed for those industries that were closed by government decree or suffered from a drastic slowdown as their customers were forced to stay indoors.

But the furlough scheme outlived the initial panic for nearly two years. And it came at a terrible cost — contributing to the £400 billion of government debt with which we have been saddled.

To pay off this monstrous IOU and its insatiable demand for interest, a Tory government has felt it necessary to tax the population at the highest level in 70 years.

An economy cannot grow when fewer people are producing fewer products in fewer hours.

Poorer

By flooding the economy with money not linked to increased productivity, the furlough scheme has made us poorer as a nation.

I’ve spoken to former employees who can’t see the sense in working as a bar manager when all their mates ‘work’ from home for much of the week and effectively enjoy every Monday and Friday off.

The benefits and tax system has to change so that it makes clear sense to work rather than lounge around at home.

We have to use both the carrot and stick to encourage people to return to work five days a week, so we as a nation become more productive and the fruits of all that labour passes through the system.

If we don’t, the terrible effects of furlough will be felt for decades and Britain will be locked in a downward spiral that will make us poorer still and diminish our global stature.

▪ HUGH OSMOND is founder of Punch Taverns and a director of the Various Eateries restaurant group.