MPs, manufacturers, the CBI and the TUC are all calling on Chancellor Rishi Sunak to extend the furlough scheme which is due to end on October 31st.
The Job Retention Scheme, as it is officially known, has been paying the wages of 9.6 million people since April but is due to close at the end of next month.
There is now a chorus of pleas for the Chancellor to extend the scheme or risk mass unemployment as workers leaving the scheme find their job is no longer available to them.
The House Of Commons Treasury Committee released a critical report claiming that if the furlough scheme is not extended beyond October, or replaced by some other measures, the country will be plunged into mass unemployment and ‘viable businesses might go to the wall’.
Unemployment was at 3.9% at the start of lockdown, but rose to 4.1% in the three months to July with firms across the country announcing redundancies even before the furlough scheme closes.
Prime Minister Boris Johnson said previously that extending the scheme would only keep people ‘in suspended animation’.
Chancellor Sunak has ruled out an extension, but said firms will receive £1,000 for every furloughed worker still in employment at the end of January.
Treasury Committee chairman Mel Stride said: “The Chancellor should carefully consider targeted extensions to the Coronavirus Job Retention Scheme and explain his conclusions.
“As the committee has said throughout the crisis, the chancellor must continue to show flexibility in his approach. We hope that the Treasury’s unwillingness to implement the recommendations from our first report is not a sign of how it will respond to this one.”
Most at need
Outgoing CBI director general Carolyn Fairbairn has called for a new scheme, focusing on those firms most in need and with less generous terms as she warned that companies will be starting to consider their redundancy strategies.
The manufacturer’s organisation Make UK has warned of ‘a jobs and research disaster’ with the loss of vital specialist skills if nothing is done to try to keep jobs open.
The organisation represents 20,000 companies across the industrial sector and has pointed out the types of support scheme offered by the likes of France, Germany and Spain as possible alternatives.
A recent survey of its members found that two thirds said they planned to make or might make more redundancies in the next six months.
Frances O’Grady, general secretary of the TUC, commented: “The TUC has set out a new plan for a job retention and upskilling scheme supporting short-time work. The chancellor must act quickly and decisively to put a scheme in place before unemployment surges.”
Chief executive of the Resolution Foundation think tank, Torsten Bell, said that the Chancellor must reconsider the plans to end the furlough scheme, and called the Treasury Committee’s report ‘essential reading for Treasury officials’.
He added: “Extending support for the hardest hit sectors of the economy will be essential to limit the rise in unemployment Britain faces in the months ahead.
“The government will also need to shelve plans to cut back Universal Credit payments to prevent millions of families from suffering a fresh income shock next spring.”
A Treasury spokesman said the furlough scheme will have been open for eight months when it ends in October, adding: “We’ve been clear that that we can’t sustain this situation indefinitely and must now focus on providing fresh work opportunities for those in need across the UK.”