Trade unions have warned chancellor Rishi Sunak against cutting support for workers affected by the coronavirus crisis, amid claims that the chancellor is considering cutting the support of the “furlough” scheme under which the state pays part of their wages. Businesses are calling for clarity on the chancellor’s intentions, warning that support must remain in place so long as firms’ activities are impacted by restrictions on normal life.
The British Chambers of Commerce floated proposals for a move to partial furloughs, allowing firms to phase in their move back to pre-pandemic working practices. The chancellor is facing growing pressure over the cost of the job retention scheme, with latest government figures showing 6.3 million people are having up to 80% of their salaries paid by the Treasury at a price of £8 billion.
A decision on whether to extend the support beyond the current cut-off of the end of June is needed by the middle of next week, to avoid companies starting redundancy processes to lay off staff in July. There were reports that Sunak will announce plans next week to wind down the scheme from July, with options including cutting the subsidy level and lowering the £2,500 cap on monthly payments.
But Treasury sources insisted that no decisions have yet been made, insisting that “everything is still on the table.” TUC director general Frances O’Grady warned that any changes must not undermine the incomes of workers currently furloughed. “The job retention scheme must be flexible enough to allow for a gradual return to work,” she said.
The British Chambers of Commerce also called for flexibility, saying that the job retention scheme should be “adapted” as the UK gradually moves away from lockdown, rather than withdrawn in an abrupt manner. BCC director general Adam Marshall said: “The job retention scheme has been successful in its aim to protect livelihoods. Ministers should adapt the scheme in alignment with any phased restart of the economy. Support must remain in place for firms that are not able to operate for an extended period and for those who face reduced capacity or demand for their services as a result of ongoing restrictions. Adaptations could include the ability to partially furlough staff to support a phased rebuilding of capacity. Businesses need clarity on this, and the future of other support schemes, so they can plan ahead, survive this crisis and thrive in the future.”
Health Secretary Matt Hancock has previously said the Government must “wean” businesses off the scheme “as the economy gets back on its feet”.
