Employers to be given £1,000 for each furloughed worker’s return
Chancellor delivers £9.4bn message to workplaces ... ‘stand by your staff and we will stand by you’
EMPLOYERS will be given £1,000 for every worker they bring back from furlough as part of a £9.4billion jobs retention bonus scheme, Rishi Sunak announced yesterday.
Under the new programme, businesses will receive a one-off payment for each employee that they retained at the end of January. Individuals must be paid at least £520 per month for their employers to qualify for the support in order to ensure they are in “decent work”.
“It is vital that people aren’t returning for the sake of it,” the Chancellor told the Commons during his summer statement.
Mr Sunak hailed the “significance” of the policy, noting it could cost the Treasury in excess of £9billion if all 9.4million furloughed workers return to their jobs. “Our message to business is clear; if you stand by your workers, we will stand by you,” he said.
The Government is in the process of winding down its Coronavirus Job Retention Scheme, with Mr Sunak yesterday insisting it will end in October. He said: “The truth is, calling for endless extensions to the furlough is just as irresponsible as it would have been back in June to end the scheme overnight. We have to be honest, leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before.
“And the longer people are on furlough, the more likely it is that skills could fade and they will find it harder to get new opportunities.”
Inside the Treasury it is hoped that the new “bonus” programme will act as an additional incentive for employers to keep staff on. However, Anneliese Dodds, the shadow chancellor, questioned how the Chancellor could ensure the £1,000 bonus would “not just
‘Firms will be doing all they can to keep people on board. But with cash so tight, January will feel like a long way off for some businesses’
‘Employers have been topping up the pay of furloughed workers and are expected to bear more of the cost of the scheme from next month’
go to those employers who were already planning to bring people back into work” and asked for further support for firms which “lack the cash flow to be able to operate”.
Her concerns were echoed by the Resolution Foundation. The think tank warned that the scheme would make little difference to employment levels, with payments mainly going to firms which would have brought back those workers anyway. Torsten Bell, the chief executive, said that the scheme was “poorly targeted at those jobs that are most at risk of being lost”.
Meanwhile, business leaders said that the £1,000 payment, which will be rolled out in February, could come too late for many struggling firms. Jonathan Geldart, director general of the
Institute of Directors, said: “The Chancellor pulled a few rabbits out of his hat today, but many directors will feel like he missed a trick. We fully understand the Treasury’s desire to focus on the young, and particularly badly-affected sectors, but coronavirus has crippled many parts of the economy.
“The JRS bonus offers something of an off-ramp from the furlough scheme, and firms will certainly be doing all they can to keep people on board.
“However, with cash so tight now, January may feel like a long way off for some businesses.”
The Government has been warned this week that unemployment will hit five million unless urgent steps are taken. The Organisation for Economic Cooperation and Development forecast that almost one in seven people could be unemployed by the end of this year, with the UK’S unemployment rate rising to 14.8 per cent.
Mr Sunak said the Government “understand that those businesses that have had to furlough employees have been through a difficult time”, insisting that was why the Government had announced the bonus scheme.
To counter exploitation of the programme, the Treasury set the minimum monthly wage necessary to apply for the payment at £520, which is in line with the lower earnings limit of National Insurance. This covers more than 90 per cent of all furloughed employees and will stop businesses from gaming the system by keeping workers on minimum hours and collecting the £1,000 payment. Ms Dodds urged the Chancellor to “abandon his one size fits all approach to withdrawing the job retention and self-employed schemes”.
With a potential cost of £9.4billion, the Taxpayers’ Alliance questioned who would “pay for it all”. John O’connell, its chief executive, said: “While the jobs retention bonus will help ensure that the furlough scheme isn’t just an expensive pause on mass lay-offs, taxpayers will be concerned about how and when they will pay the bills forever [with] more spending promises.”
The National Institute Of Economic and Social Research, the think tank, said the bonus was “too small to be effective”. Garry Young, its deputy director, said some companies would now lay off furloughed staff. He said: “While the aim of the summer statement is laudable, the new measures look to be badly timed and could precipitate a rapid increase in unemployment. The incentives offered to employers look too small to be effective.
“Many employers have been topping up the pay of furloughed workers and are expected to bear more of the cost of the scheme from next month. They will be reluctant to do this now they know that the scheme won’t be extended.
Earlier, Boris Johnson noted that the majority of Britons had been “overwhelmingly impressed” with the Government’s package of support. “You cannot go on forever with a furlough scheme that keeps employees in suspended animation,” he said.