£9BN SCHEME ‘WO

Bosses’ grim verdict as Rishi unveils replacement for furlough

Rishi sunak yesterday unveiled his plan to replace furlough with a scheme to top up workers’ wages – only for businesses to warn it would not prevent major job losses.

The Chancellor said the Jobs support scheme (Jss), a form of wage subsidy, would be brought in after furlough is wound down at the end of next month – and last until May.

it could benefit millions, but is far less generous than the furlough scheme – with the state’s contribution falling from 80 per cent of a worker’s wages to a maximum of just 22 per cent.

And it leaves employers potentially having to hand over more than half of their employees’ pay – though they may only be working a third of their hours.

The CBi last night welcomed the scheme as a ‘bold step’ that would help to reduce the ‘scarring effect’ of unnecessary job losses on the economy. But other business groups and bosses warned that it was nowhere near enough to prevent a wave of redundancies this autumn when furlough ends.

The Treasury believes take-up will be anything between two and five million people. At the top end, the scheme could cost £9billion over six months.

The institute for Fiscal studies (iFs) also warned it was ‘significantly less generous’ than furlough which has cost around £6billion a month, compared with the £300million cost of this scheme if one million workers take it up.

Yesterday, Mr sunak told MPs the furlough scheme could not continue indefinitely, and that he could not commit to saving every job – indicating that many would lose theirs once the Jss comes in.

The Chancellor said the Jss would ‘directly support the wages of people in work, giving businesses that face depressed demand the option of keeping employees in a job on shorter hours, rather than making them redundant’.

in his statement, Mr sunak said the economy was likely ‘to undergo a more permanent adjustment,’ adding: ‘The sources of our economic growth and the kinds of jobs we create, will adapt and evolve to the new normal.’

But Jane Pendlebury, head of the hospitality Professionals Association, said: ‘The latest measures, whilst offering support, don’t really go far enough given the fact the industry genuinely is on its knees.

‘While we’re pleased to see the implementation of the Job support scheme... it still won’t prevent major job losses.’

Unlike the furlough scheme, which protected all jobs, the Jss will only prop up ‘viable’ ones – meaning staff must work at least a third of their hours to qualify.

A worker doing a third of their hours will be paid for these by their employer as usual. On top of that, they will receive two-thirds of the remainder of their wages.

half of this top-up payment will be paid by the employer, and the other half by the Government.

Overall, it means the person receives almost 78 per cent of their original wage, with 55.5 per cent coming from the employer and 22.2 per cent from the state. These percentages change if a person works more hours.

For example, those working half their hours will receive 83 per cent of their wage, with the Government committing 17 per cent.

All firms with 250 employees or fewer will be eligible for the wage support concept, which starts in November and runs for six months, but larger businesses will have to prove their profits have been hit by the pandemic.

The payment will be based on an employee’s normal salary, with the Government contribution capped at £697.92 per month.

After three months, the Government can increase the minimum number of hours that must be worked to qualify. Eligible employees must have been on the payroll since at least september 23.

however, Treasury rules say workers cannot be made redundant or put on notice while a Jobs support scheme grant is being claimed on their behalf.

As with the furlough scheme, employers will be reimbursed by the Government after the work has been done.

Employers who keep furloughed staff on to take advantage of the scheme will also receive the £1,000 job retention bonus.

Dame Carolyn Fairbairn, director general of the CBi, said: ‘These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter.’

But Paul Johnson, director of the institute for Fiscal studies, said: ‘ When the furlough scheme expires that is likely to translate into sharply rising unemployment.’

Yesterday the Bank of England’s chief economist, Andy haldane, told iTV Tonight that ‘long-term scars’ could be left on the economy if people remained unemployed for too long because of the pandemic.

‘Sharply rising unemployment’