Will furlough be extended? Warnings issued to Rishi Sunak | Personal Finance | Finance


The furlough scheme is set to end on October 31. It will leave many who have still been unable to return to work in the lurch, and fears are growing that it could lead to a huge unemployment crisis. Leading unions and business groups are saying that the pandemic is not over – so neither should the jobs retention scheme be over.

Some 9.3 million people have been furloughed since the onset of the coronavirus crisis, and the forthcoming end to the scheme is causing significant anxiety for workers and business owners.

The scheme has been paying workers 80 percent of their wages up to the value of £2500 – and has been winding down in recent months, with the percentage of payment from the Government dwindling and employer support required to keep workers on the scheme.

The Government has been urged by MPs, business groups and unions to extend the scheme in one form or another, either by extending the scheme how it is or coming up with more targeted support.

The Unite union has branded the premature ending of the scheme as letting the ‘redundancy floodgates’ open.

Last week the Treasury Select Committee said the Government should consider a targeted extension of the scheme.

Mel Stride, chair of the Treasury Select Committee, said Chancellor Rishi Sunak “should carefully consider targeted extensions” to the scheme.

She continued: “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 head of the Trades Union Congress Frances O’Grady has offered to work with the Chancellor to come up with a solution to the looming unemployment crisis.

“We are ready to work with you again – if you are serious about stopping the catastrophe of mass unemployment.

“Rishi Sunak: stand by working families – don’t walk away.”

Ridiculing the government’s handling of the pandemic, Ms O’Grady declared: “A useless app, a mutant algorithm and a half-baked test and trace system. Less ‘moonshot’, more a case of moonshine.”

Responding to the TUC leader’s call, a government spokesman said: “Supporting jobs is an absolute priority which is why we’ve set out a comprehensive Plan for Jobs to protect, create and support jobs across the UK by providing significant, targeted support where it is needed the most.

Will furlough be extended?

Boris Johnson ruled out extending the scheme this week, saying it could not continue as “you’re just keeping people in suspended animation”.

The scheme has already cost the Government more than £34bn.

Not much has been heard direct from the Chancellor Rishi Sunak recently, who opened the scheme to significant praise earlier in the COVID-19 crisis.

When asked if he would provide sector-specific support after the end of the furlough scheme, the Chancellor said he had “not hesitated to act in a creative and effective ways to support jobs and employment and will continue to do so”.

Should the scheme be extended, it is highly unlikely it will look how it does now – with targeted measures for badly affected industries.

The unemployment rate is currently at 4.1 percent, according to the Office for National Statistics.

Some 48,000 jobs were lost in the three months leading up to July, with many saved by the furlough scheme.

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