Sunak set to reveal new measures to replace furlough

CHANCELLOR Rishi Sunak is set to announce new measures to tackle the economic hit that will come if there is a second wave of coronavirus, writes Will Hayward.

He will update the House of Commons today on the plans for protecting jobs through the winter.

The furlough scheme, which paid up to 80% of a person’s wages, is widely seen as having prevented mass unemployment back in March at the beginning of the crisis.

However, in July Mr Sunak announced that the scheme would finish at the end of October because of its huge financial cost.

Since that announcement, there have been widespread concerns that this cliff edge would lead to widespread job losses.

The recent spikes in cases across the United Kingdom and the warnings from First Minister Mark Drakeford to avoid unnecessary travel have increased the concerns over the scheme’s closure.

Wales is more dependant on the furlough scheme than any other part of the UK. This is in large part down to Wales having a higher proportion of manufacturing roles compared to in England, and so more people in Wales being unable to work from home.

The dependence on the furlough scheme has restricted the degree to which the Welsh Government can diverge from the UK on lockdown rules, with the First Minister admitting that Wales doesn’t have the “financial firepower” to be able to run a similar scheme itself.

Businesses and workers are desperate for clarity on what will happen once furlough ends.

Annie Gascoyne, director of economic policy at the CBI, said: “The Job Retention Scheme has kept millions of people in jobs since the crisis started. As the economy reopened and with the scheme coming to an end soon, it’s no surprise that fewer people were still being furloughed.

“But that does not take away the absolutely critical need for a successor to replace it.

“Businesses are still struggling with a lack of cash and low demand, perhaps even more so in areas where there are greater local restrictions.

“We need a new scheme that is less generous, but most importantly still offers firms enough support to reach the other side and keep more people in work. Saving jobs today is easier than picking up the pieces tomorrow.”

THE Chancellor has been urged to “get around the table” and fast-track new job support plans amid reports he is working on a new Germanstyle scheme to avoid mass unemployment once furlough ends.

Mr Sunak is said to be weighing up a new scheme as part of a wider emergency support programme as pressure mounts on the Government to help businesses survive a second wave of coronavirus.

The mooted plans would reportedly see the Government and firms share the cost of topping up wages for employees only able to work part-time due to the pandemic.

Calls have ramped up for a new lifeline for firms after Boris Johnson announced six months of tougher restrictions that threaten the economic recovery, as fears also grow of mass unemployment once the furlough scheme ends on October 31.

Bank of England governor Andrew Bailey said on Tuesday it was time to “stop and rethink” the furlough scheme in favour of a targeted approach.

The Trades Union Congress (TUC), which outlined its furlough replacement proposal last month, said the Government must “fast-track a new plan” to protect jobs.

TUC general secretary Frances O’Grady said: “We have published detailed proposals for a new short-time working and upskilling scheme. With the right approach, we can stop mass unemployment scarring millions. My message to ministers is clear – let’s get around the table and fast-track a new plan.”

Mr Sunak has pledged to be “creative” and is understood to be weighing up a number of possible measures to subsidise workers’ wages, having consulted unions and business groups.

It is thought he postponed an announcement due yesterday to extend emergency loan schemes in favour of a bigger support package.

One option reportedly being considered is a scheme similar to Germany’s highly-praised Kurzarbeit, or shorter work-time policy, under which firms can radically cut working hours in economic downturns, with the state replacing part of lost income.

The TUC has proposed a similar scheme that would see workers receive 80% of their salary for the hours they are not in work.

Companies would get a 70% subsidy from the Government, provided they bring back every worker on the scheme for a minimum proportion of their normal working hours.