Government calls time on furlough scheme

Is higher employment a price worth paying?

Despite repeated calls for its retention – including by the cross-party Treasury Select Committee – and amid dire warnings of mass unemployment as Britain plunges deeper into recession, the government has confirmed that it will wind up its furlough scheme at the end of this month.

The furlough, or Job Retention Scheme, which has cost around £40 billion, has seen the government pay up to 80% of the wages of some 10 million workers and has undoubtedly saved jobs. But millions of jobs remain at risk, and research from the Institute of Public Policy Research’s think tank warns that withdrawing the scheme will cause unemployment levels “not seen since the Great Depression of the 1930’s.”

Politicians from all parties and business leaders repeatedly called for a government change of mind, but there was no late Uturn. Instead, Prime Minister, Boris Johnson, bid his Chancellor, Rishi Sunak, to announce his new “Plan for Jobs”, which includes various financial incentives, including a Job Retention Bonus, to help firms get workers back to their jobs from furlough. There will also be a few relatively minor changes to VAT rates and payments, and a “Kickstart Scheme”, aimed to encourage employers into adopting new trainee and apprenticeship programmes.

“Withdrawing the scheme will cause unemployment levels ‘not seen since the Great Depression of the 1930’s.”

But for critics the measures announced are nowhere near enough, particularly in regard to the security of jobs of older workers. SNP Westminster leader, Ian Blackford, is among many who urged Boris Johnson to extend the furlough scheme, warning of unemployment levels not seen since Margaret Thatcher was prime minister. Before the announcement on 24 September, there had been an angry parliamentary exchange between the Prime Minister and Leader of the Opposition, Sir Keir Starmer.

The Labour leader called for an urgent change of mind from the Prime Minister, warning, “The jobs of millions of people are at risk, the longer he delays the more they’re at risk, so will he act, finally get this decision right and commit to extend the furlough for those sectors and those workers who desperately need it?” But Mr Johnson remained unmoved.

“What he (Starmer) wants to do is extend the furlough scheme,” he said. “What we would rather do is get people into work through our kick-start scheme to support people, young people in particular, to get the jobs they need. He wants to keep people out of work in suspended animation, we want to move this country forward.”

What our surveys show

The warnings and predictions of imminent disaster can hardly have been clearer and have come from not only Parliament, where the Treasury select committee called for a “targeted extension”, but also from business leaders, research groups and even advice and charity organisations. Citizens Advice chief executive, Gillian Guy, said recently, “We are already supporting one person every two minutes on a redundancy issue. As the furlough scheme ends that number could snowball.”

Age UK also has serious concerns, with charity director, Caroline Abrahams warning, “We fear that unless the government intervenes to help, unemployment among older, shielded workers is set to soar.” Our survey question was therefore simple and straightforward: Should furlough have been extended? The answer was equally clear, and by a large majority, with 62% of those surveyed backing calls for an extension to the furlough scheme and only 22% in favour of it being wound down as the government has now confirmed that it will.

 

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