As the UK’s so-called Freedom Day approached, the furlough scheme was in retreat. Figures released by the Office for National Statistics show that in June 2021, 1.9 million people were on furlough, more than half a million fewer than the month before and the lowest number since the scheme was launched just over a year earlier. As hospitality and retail have started to recover, young people in particular have found opportunities to get back into work and redundancies have not increased significantly as the scheme has become less generous to employers.
At the beginning of June, 57 per cent of those working in air passenger transport were on furlough, with hotels and travel agencies also among the top five industry groups still receiving support. While fully vaccinated European and American travellers have reason to cheer the announcement of quarantine-free arrivals into the UK, travel to the US from the UK, one of the most profitable markets for the aviation industry, remains impossible for the vast majority, and only once bilateral travel expands can the market hope to recover. Meanwhile, many European-focused travel businesses only turn a profit in the warmest months of each year and after a heavily suppressed summer are facing the prospect of a long, unsupported, winter.
The Treasury is rightly proud of the money spent and the effort made to protect as many UK jobs as possible, and most analysts agree that the furlough scheme has prevented a sharp increase in unemployment. However, the region with the most significant international links is now the region with the highest unemployment rate: London. Perhaps this shouldn’t be surprising when one considers that, to take one example, half of all retail revenue in the West End comes from international visitors in normal times.
We do not know how long it will take for international travel demand to recover, but even the most optimistic would not bet on anything earlier than Summer 2023. Of course, central government job support cannot last indefinitely. But to remove the furlough scheme without a strategy for the most affected sectors risks undoing the Treasury’s good work over the last 15 months.
Ministers should overcome their resistance to sector-specific support plans, on the basis that it is now clear which sectors are likely to suffer the long-tail impacts of the pandemic. Support measures for international travel could include extending the furlough scheme for the sector, but there are other steps that can be taken too. Some of these are immediate, such as reducing the cost of tests for travel. This could be done by allowing NHS tests to be used for international travel, as they already are for domestic business and leisure activities. Others need urgent, energetic, attention but will necessarily take time to bear fruit, such as negotiating a bilateral deal to reopen transatlantic travel.
We cannot be complacent about the capital’s magnetism as a global hub for tourism and business, either in the coming months while travel remains heavily suppressed, or in the coming decades as a post-pandemic “global Britain” charts a new course for itself in the world. Our competitors across Europe and beyond are investing in their international travel capacity. They are ready to feed off our inaction. If the government fails to provide adequate support and a real strategy for the sector, thousands of jobs will be at risk and they might never come back.
Image from Heathrow Twitter feed. Adam Tyndall is Programme Director for Connectivity with business group London First.
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