Ministers braced for 4m to be out of work

DWP hires 25,000 staff to cope with rise in Universal Credit claims as furlough scheme draws to a close

MINISTERS are secretly preparing for four million people on the dole because of the economic fallout from the coronavirus pandemic.

Therese Coffey, the Work and Pensions Secretary, said her department was preparing for that level of unemployed but said she “genuinely hopes” to avoid that figure.

The prospect of four million unemployed far outstrips the three million unemployed of the Eighties. Ms Coffey said officials were making plans from forecasts set out by the Office of Budget Responsibility, which said in July in its most pessimistic forecast that unemployment could hit 13.2 per cent – equivalent to four million – by early next year.

She told Sky News: “I genuinely hope we don’t reach, obviously, that figure. But it’s important we are ready to help people.” The number on Universal Credit soared during the first wave of the pandemic, with 2.7 million people claiming it by August, a 121 per cent increase since March.

People can claim Universal Credit either to bolster their low salary or to support them while they look for a job.

Ministers are now preparing for a sharp rise in unemployment as Rishi Sunak, the chancellor, ends the £39 billion furlough scheme, replacing it with a wage subsidy plan from Nov 1.

The taxpayer will no longer contribute to the pay of an estimated three million employees who have had their careers put on ice by the pandemic.

Instead, the Treasury will only subsidise those who are working at least a third of their usual hours.

Ms Coffey said her department was ready for an increase in claimants and was “evolving our plans, recognising how the economy works”.

Her department has won plaudits for swiftly staffing up to cope with the huge increase in claimants for Universal Credit. It will have hired 25,000 staff in the year to March 2021 – a 33 per cent increase year on year, many of whom are work coaches who help retrain people who have lost their jobs. Ms Coffey said:

“The doubling of work coaches is a real investment in making sure we help people, many of whom will never have had benefits and may not have been unemployed for a very long time.

“That might be putting their chosen career on hold, for a couple of years while their sector recovers, but helping them get into growth sectors – construction, other infrastructure, health and social care.” She added: “We’ve never promised we could save every single job or every single company. We will do our best to try to help businesses keep going. But we have reached a point where we absolutely recognise we cannot pretend – we’ve never pretended – that we can save every job.”

A spokesman for No 10 said Ms Coffey was referring to figures from the OBR. A Downing Street spokesman said: “What the Work and Pensions Secretary was referring to was the OBR forecasts. The Government is prepared to step up and support as many people as possible. We are trying to keep as many people as possible in jobs, including through the job support scheme.”

Companies are cutting hundreds of thousands of jobs as Covid-19 batters the economy. The unemployment rate, for May to July, is 4.1 per cent, the Office for National Statistics said. However, the claimant count suggests this will get much worse, with many new Universal Credit claimants being young people.

Official figures published last month show that the numbers of under-25s on Universal Credit increased by 250,000 to a record 538,000 during lockdown.

The surge in claimants from March to July meant that one in 13 of the seven million Britons aged between 16 and 24 years old was now claiming benefits.

Under a Kickstart s cheme f or employers launched last month, the Government will fully fund each Kickstart job, the minimum wage, National Insurance and pension contributions for 25-hour weeks from November.

Employers will be able to top this up, while the Government will also pay them £1,500 to set up support and training for staff.