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Sunak urged to consider ‘targeted’ furlough scheme extension

Written by on 11 September 2020

Chancellor Rishi Sunak has been urged by a cross-party group of MPs to consider “targeted extensions” to the coronavirus furlough scheme.

The wage subsidy scheme, which has supported millions of workers temporarily laid off because of the pandemic, is due to end on 31 October – and some fear that could mean large-scale job losses.

Now the Treasury Select Committee, led by Conservative MP Mel Stride, has joined calls from industry groups and opposition politicians to look at continuing the support in some form.

Job loss fears as furlough scheme winds down

Mr Stride said: “The chancellor should carefully consider targeted extensions to the Coronavirus Job Retention Scheme and explain his conclusions.

“The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy.”

The committee’s latest report on the economic impact of the pandemic also urges further efforts to stimulate consumer spending – following the popularity of the Eat Out To Help Out initiative.

Among other recommendations, it presses the chancellor to set out a “road map” for repairing battered public finances after the crisis.

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The report warns against too-hasty tax increases that might stifle an economic recovery but describes lifting the “triple lock” guarantee on state pension increases as a “sensible proposal”, despite a Conservative manifesto pledge to keep it.

On the furlough scheme, the report cites the needs of “a large proportion of business in sectors such as hospitality and leisure that are suffering the most from social distancing” which “may still have a viable long-term future at the end of October” when the scheme is due to end.

Rishi Sunak

Ending furlough ‘the most difficult decision’

Figures from the Treasury last month showed 9.6 million jobs have been supported by the initiative at a cost so far of more than GBP35bn. Mr Sunak has insisted it will not be extended.

Instead, the government has offered a GBP1,000 bonus to employers for every furloughed worker brought back – though the select committee report said in many cases this will cover employees who would have gone back to work anyway.

Bank of England governor Andrew Bailey has backed an end to the furlough scheme but others including Labour have called for a re-think.

The Treasury said it would “continue to innovate in supporting incomes and employment through our Plan for Jobs”, but stopped short of commenting on the report’s recommendations.

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Mike Cherry, chairman of the Federation of Small Businesses, said that the government should look closely at a potential successor to the furlough scheme.

He said: “The priority should be protecting viable small businesses – and all the jobs they provide – that have been disproportionately impacted by the coronavirus crisis.”

Steve Turner, assistant general secretary of trade union Unite, said: “Hundreds of thousands of workers could face a desperate future unless the prime minister and chancellor move swiftly to modify the Job Retention Scheme.”

Germany has agreed to extend a job support scheme for its workers until the end of next year.