Rishi Sunak rejects growing calls to extend furlough scheme beyond October

7 August 2020, 11:56

By Ewan Somerville

Chancellor Rishi Sunak has dismissed growing pressure to extend the furlough scheme beyond October, insisting it cannot continue “indefinitely”.

The scheme, paying 80 per cent of employees’ wages up to £2,500 per month, has already been extended once and helped 9.6 million workers, costing £33.8 billion.

Opposition parties and campaigners are warning of a “cliff edge” for hard-hit sectors when the scheme winds down, warning it would be a “grave mistake” not to extend it.

But Mr Sunak doubled down on Friday morning, telling LBC's Tom Swarbrick : “This has been a difficult decision. But if you look at it from start to finish, the government will have been stepping in to pay people's wages for eight months, which in and of itself is a very long period of time.

“Most reasonable people will look at that and say this is something which cannot go on indefinitely. It's not sustainable.”

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Chancellor Rishi Sunak visited Glasgow on Friday amid fears of rising support for independence
Chancellor Rishi Sunak visited Glasgow on Friday amid fears of rising support for independence. Picture: PA

Mr Sunak visited Glasgow on Friday amid rising concern that the benefits of the scheme there have bolstered support for independence.

More than 6,500 jobs were lost or put at risk this week alone, prompting Labour leader Sir Keir Starmer to demand a targeted extension to prevent a “jobs crisis on a scale not seen for generations”.

Ed Miliband, the shadow business secretary, warned this week that the Government would be “culpable for thousands of workers across the country losing their jobs and livelihoods” unless it urgently adjusted the furlough scheme.

“Businesses in vastly different sectors and circumstances should not be treated in this uniform way, and it is clearly unfair and illogical for those employers still locked down and unable to trade,” he said.

But Mr Sunak stressed on LBC that his Job Retention Bonus, a £1,000 payout for any company that retains a furloughed employee back until January, would help alleviate a jobs crisis.

“If you look at the wage distribution of people on furlough, that works out as quite a significant economic benefit to do so. That will make quite a difference we believe,” he told LBC.

“It's clearly not the case that everyone can return to the job that they had. It would be wrong to pretend otherwise.

“For those people, rather than keeping them trapped in the uncertainty of a future we know won't exist, it's better to look forward and for us to provide them with new opportunities.”

READ MORE: Chancellor announces bonus for employers that bring staff back from furlough

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Labour said night-time industries alone could face hundreds of million pounds in costs, based on industry figures that suggest more than 500,000 workers are furloughed in that sector.

Many could be closed again, like in Aberdeen, during local lockdowns this autumn.

The Resolution Foundation said around half of the 9.2 million people placed on the government’s job retention scheme (JRS) since it launched in April have still not returned to work.

Based on an analysis of official figures, the think tank said more than a million hospitality and leisure workers face higher risk of redundancies in the coming month.