GRAND PLAN TO SAVE JOBS
Firms to get £1,000 for each furloughed worker they keep when scheme ends
FIRMS will get a £1,000 bonus for every furloughed worker they keep in a job as Rishi Sunak seeks to stave off a flood of redundancies.
The pledge will cost taxpayers more than £9billion if all 9.4million people who have been put on furlough are taken back by their employers.
The Chancellor wants to stop a jobs bloodbath when the scheme, which has seen the Government cover up to 80 per cent of salaries, ends in October.
Unemployment is currently at 4 per cent, but some fear it could soar to almost 15 per cent if there is a second wave of the coronavirus pandemic.
Mr Sunak said yesterday that it would be a ‘difficult moment’ when the furlough scheme, which has so far cost £27.4billion, ends. But he insisted ‘it cannot and should not go on for ever’ and warned that it would ‘irresponsible’ to call for ‘endless extensions’.
He told MPs: ‘Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before.
‘The longer people are on furlough, the more likely it is their skills could fade, and they will find it harder to get new opportunities. It is in no one’s long-term interests for the scheme to continue forever, least of all those trapped in a job that can only exist because of Government subsidy.’
Mr Sunak announced that a £1,000 bonus will be paid to companies if they keep their furloughed employees in work until the end of January.
He said: ‘We’re introducing a new policy to reward and incentivise employers who successfully bring furloughed staff back – a new jobs retention bonus.
‘It’s vital people aren’t just returning for the sake of it – they need to be doing decent work. So for businesses to get the bonus, the employee must be paid at least £520 on average, in each month from November to the end of January. Our message to business is clear: if you stand by your workers, we will stand by you.’
Employers welcomed the announcement, but critics questioned whether the money could be better targeted.
Businesses will get the cash even if they have already brought employees back to work with no intention of laying them off.
Paul Johnson, director of the Institute for Fiscal Studies, said: ‘[The] surprising aspect of the bonus is it’s payable in respect of any employee furloughed at any point even if already back at work.
‘You’d think a lot of this spending will be pure deadweight – going to employers who have already [or] would anyway bring workers back’.
Ryan Shorthouse, director of the Bright Blue think-tank, said: ‘It seems unlikely that a £1,000 payment to employers for retaining each furloughed employee will be a strong enough incentive to keep people on the payroll, considering that total labour costs per employee will be significantly higher.
‘More generous support for retaining workers targeted in badly affected sectors would probably be much more effective and efficient.’
But Kate Nicholls, the head of trade body UK Hospitality, said: ‘This is hugely positive and allows us to be able to transition people from furlough back to employment in hospitality – key as we face prolonged suppressed revenues and 1.5million still furloughed.’
The Organisation for Economic Cooperation and Development has warned that the number of unemployed people in the UK could soar to almost 14.8 per cent if there is a second wave of coronavirus infections.
The OECD forecast that if a second wave can be avoided, the unemployment rate is likely to rise to 11.7 per cent by the end of the year, the highest level since 1984 when it peaked at 11.9 per cent. The current UK unemployment rate is 3.9 per cent.
‘They need to be doing decent work’