End of furlough ‘will leave Wales among worst off ’
WELSH businesses in the retail and manufacturing sectors are expected to be hit especially hard as the UK Government’s furlough scheme comes to an end in October, Labour has warned.
The party says the “indiscriminate severing” of furlough support in vulnerable industries risks deepening and entrenching regional inequality.
It claims parts of the UK are being “written off” by ministers, with its figures suggesting Wales will be among the hardest-hit parts of the UK when the scheme is ditched on October 31.
Under the scheme, the UK Government funded 80% of the wages of millions of workers, up to a maximum cap of £2,500 per month.
Retail has been the hardest hit by mass redundancies since the coronavirus pandemic struck, with manufacturing and aviation also badly affected.
Tens of thousands of job losses have been announced and more redundancies are expected in these sectors, yet they have received no tailored support.
Labour claims the impact is likely to be felt far more deeply by some areas of the UK based on the proportion of their workforce in these sectors, with local economies being written off by the UK Government as Britain enters recession.
The UK already has the worst regional inequalities in Europe and, according to Labour, without targeted action this is likely to get even worse.
Data shows that Wales has the second-highest proportion in the UK of workers in the retail sector, behind only the north-west of England and immediately ahead of the northeast.
Wales, together with the east Midlands, the west Midlands, Yorkshire and the Humber, the north-east of England and the northwest of England, all have between 10%-12% of their workforce in the manufacturing sector.
By contrast, only 2.2% of London’s workforce is in manufacturing.
London, however, is likely to be most affected by the damage to the aviation and travel industry, as it is the region with the highest proportion (0.7%) of its workforce in the aviation industry, and 64,000 jobs relying on aviation and travel.
Labour’s Shadow Business Minister Matthew Pennycook said: “Ministers are writing off parts of the UK as the country enters recession, with figures suggesting some places will be disproportionately hit by the jobs crisis. Labour is calling for the Government to U-turn on its damaging blanket approach to withdrawing furlough, which fails to consider the circumstances of different sectors or the impact on the communities that have a proud history in these industries.
“The Government needs to do right by these communities and businesses, and see them through the crisis by targeting support, not pull the life raft away while the storm is still raging on.”
A Welsh Government spokesman said: “We have been urging the UK Government to take a targeted approach to protect people and jobs, including the extension of the crucial furlough scheme until we are through the worst of the crisis.
“Our £1.7bn business support package means companies in Wales have access to the most generous support package anywhere in the UK. This includes our £500m Economic Resilience Fund which has already supported thousands of firms in Wales, protecting around 75,000 jobs. We also recently announced a £40m jobs and skills package, which is there to support anyone who needs help to find work, education or training or to start their own business.”
A spokeswoman for the UK Government responded: “The Government will not be blown off course in its commitment to levelling up opportunities across the UK – investing in education, technology and measures to support and create jobs.
“We have acted quickly to deliver one of the most generous and comprehensive packages of support in the world worth an initial £160bn for all sectors – including the industry.
“This includes supporting nearly 9.6 million jobs through the furlough scheme which employers across the UK have used to support their staff.”
The spokeswoman added: “Our coronavirus support for business, including in the manufacturing sector, includes more than £50bn in loans and flexibility with tax bills.
“As the economy reopens we are adjusting the support provided to ensure people can get back to work.
“The Coronavirus Job Retention Scheme will have been open for eight months from start to finish, but we’ve been clear that we can’t sustain this situation indefinitely and must now focus on providing fresh work opportunities across the UK
“Through the Government’s Plan for Jobs a series of measures has been announced to protect, support and create jobs – helping spur the UK’s recovery and ensure we can come back stronger.
“Up until June 30, 964,400 jobs have been furloughed in the manufacturing sector.
“Our broader support for the industry includes our Manufacturing Made Smarter challenge.
“This aims to drive innovation in industrial digital technologies that could increase UK manufacturing productivity by up to 30%.
“Through it, we are giving manufacturers a boost to work together to reduce costs and waste, scale up and expand into new markets, and boost competitiveness
“This includes £20m for SMEs developing innovations to improve sector productivity, as well as a new competition to support digitalised supply chains.” manufacturing