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Travel firms offer taxpayers dividends to land furlough extension

Quarantine
Quarantine

Travel firms are offering to hand dividends to the Exchequer in return for an extension of the Government’s furlough scheme until the end of the year.

With hopes of a recovery this year snuffed out by the re-introduction of travel quarantines, the business travel industry will this week urge ministers to consider a “parachute package” to rescue companies from ruin.

The radical proposals, put forward by the Business Travel Association, are intended to be self-funding and designed to not leave taxpayers out of pocket.

Firms will pledge to pay 10pc of quarterly dividends to the Government until the cost of bankrolling of wages has been repaid.

With Britons able to travel to about a third of countries without being quarantined on their return, hopes were raised at the start of last month that the operators may be able to salvage something from a turbulent year.

However, fears of a second spike of coronavirus on the Continent prompted Boris Johnson to re-introduce a quarantine on arrivals from Spain and Luxembourg. 

Ministers have warned restrictions will be extended to other countries struck by rising infection rates, hitting consumer sentiment and prompting holidaymakers to delay or cancel their plans.

Business travel bookings are down 90pc since March. Industry leaders say the re-imposition of quarantines has had a “massive negative effect on the confidence of British business to travel”.

Rishi Sunak’s furlough scheme, which has already cost the taxpayer more than £30bn, is scheduled to end in October.

Labour has urged the chancellor to rethink that decision amid forecasts that unemployment will hit its highest level since 1993.

Anneliese Dodds, the shadow chancellor, has called for targeted support for industries unable to return to business-as-usual.

The Business Travel Association proposals would mean that private equity firms which own business travel agents would forego returns until the cost of extending the furlough is repaid.

Meanwhile, the trade body backed wider industry calls for a temporary reduction in Air Passenger Duty. It said a suspension of the levy for the next 12 months would encourage bosses to travel, providing a significant trade boost.

Clive Wratten, head of the Business Travel Association said: “Targeted and limited government support for the business travel sector will not only save jobs in our industry, but underpin one of the vital support pillars for British business as a whole.”

The proposals follow a rare intervention by City grandee Sir Adrian Montague over the weekend. 

Sir Adrian, chairman of the company that owns Manchester and Stansted airports, warned Government travel policy threatens to suffocate the aviation industry.

Blanket travel quarantines to countries like Spain, he said, were “unnecessary” and ministers should implement a “more proportionate” response.

Meanwhile, the former Aviva chairman poured cold water on proposals to introduce a Covid testing regime on holidaymakers returning from virus hotspots.

He said: “We have got six weeks left of the holiday season and if the Government was able to be more tactical in the way that it approached quarantine … then that would unlock holidays for people.”

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