Sunak confirms furlough scheme will end but unveils new job support plans

Union anger as chancellor tells MPs the economy is facing a ‘more permanent adjustment’ because of coronavirus pandemic
Parliament TV

By Jim Dunton

24 Sep 2020

Rishi Sunak has told MPs that the government will not be extending the job-protecting furlough scheme introduced in March – as the civil service's biggest union has called the chancellor's alternative new measures a "plaster to cover a gaping wound".

Instead, the chancellor has set out a range of measures to support people in work and the self-employed, as well as business’ hit hardest by this year’s lockdown. 

And he warned a “more permanent” adjustment to the UK economy is likely as a result of the coronavirus pandemic.

A central feature is the new Job Support Scheme – flagged as particularly targeting “viable” roles. It will be available for employees working a minimum of one-third of their hours and requires employers to pay for the hours worked, with the wages then topped up by payments of 33% each on the part of the employer and the government. 

An example provided by the Treasury suggested that under the proposals, a worker undertaking one third of their normal hours would actually receive 72% of their regular pay under the new system.

Sunak announced yesterday that the Autumn Budget would no longer be delivered in November because it was “not the right time” to outline long-term plans as the nation braces for a second wave of Covid-19.

This afternoon he told MPs that there had been “no harder choice” than the decision not to renew the furlough scheme – which pays 80% of wages for staff who are not required to work but have not been made redundant – beyond its scheduled October end.

“Back in March we hoped we were facing a temporary period of disruption,” he said.

“The furlough was the right scheme at the time we introduced it. It provided short-term protection for millions of jobs through a period of acute crisis. 

“But as the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough.

“We need to create new opportunities and allow the economy to move forward. And that means supporting people to be in viable jobs that provide genuine security.”

The job-support package announced by Sunak today also sees a 20% support package for the self-employed, to be based on previous trading profits and the extension of the 15% VAT cut for the tourism and hospitality sectors.

Reacting to Sunak's statement, PCS general secretary Mark Serwotka said any support for jobs and key industries during the unprecedented global pandemic was to be welcomed. However he dubbed the proposals wholly inadequate for the task at hand. 

“The chancellor's measures are akin to using a plaster to cover a gaping wound,” he said.

“Our members in the commercial sector, aviation and culture are already being threatened with hundreds of redundancies, as employers seek to capitalise on the economic fallout from Covid-19.

“No one should be losing their job due to the coronavirus pandemic and that is why the furlough scheme should be extended.

“The Tories’ ideological opposition to increased state intervention is hurting the economy and costing people their livelihoods right now.”

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