The UK government’s furlough scheme is due to end on 31 October 2020. Many groups have been urging the government not to “throw away” the good work of a scheme whose abrupt end would potentially allow for millions of job losses over the coming months.
Maybe due in part to the pressure from the TUC and other groups, coupled with the re-introduction of coronavirus restrictions that had been relaxed over the summer months, the government has announced the Job Support Scheme, which will replace the furlough scheme from 1 November 2020 for 6 months.
The scheme will subsidise the pay of workers putting in fewer than normal hours due to lower demand – for the hours workers cannot work, they lose a third, the employer pays a third, and the government pays the last third, capped at £697.92 per month.
The scheme is open to small and medium sized businesses, and large businesses who have seen falls in turnover during the crisis, and applies only to ‘viable’ jobs – those which do not continue to exist purely due to the government subsidising wages through the furlough scheme.
The government has already lined up the Job Retention Bonus, which gives £1000 to organisations for each furloughed worker kept on the payroll until the end of January 2021.
However, Labour has accused the chancellor of potentially sending more than 1 million jobs to the “scrapheap” by leaving them out of his Job Support Scheme. Sectors such as the arts, entertainment and hospitality have been very heavily affected by the crisis, and shadow ministers and other groups have highlighted the fact that businesses in these sectors that rely on mass gatherings – events, weddings, festivals, theatres and sports venues – and have so far been unable to reopen, will be left out in the cold. There remains an expectation that there will be large-scale lay-offs in these sectors once the furlough scheme ends, even with the new Job Support Scheme and Job Retention Bonus in place, in addition to a potential loss of billions of pounds of spending out of the wider economy.
The government’s new scheme has drawn support from some for delaying the immediate risk of mass unemployment, and harsh criticism from others for leaving large sectors of industry out. Mr Sunak doesn’t claim the plan is perfect, stating “I cannot save every business, I cannot save every job,” while commentators suggest Mr Sunak will need to revisit aspects of the scheme to fill in the gaps once it is underway.