More than half a million people face redundancy or loss of hours unless furlough scheme is extended

New analysis shows the risk of fully withdrawing support from businesses and workers when the economy is still recovering

More than half a million people face redundancy or loss of hours unless furlough scheme is extended (Photo by OLI SCARFF/AFP via Getty Images)
More than half a million people face redundancy or loss of hours unless furlough scheme is extended (Photo by OLI SCARFF/AFP via Getty Images)

More than 650,000 jobs currently covered by furlough will still require support through the scheme when it comes to an end next month, according to research.

New analysis by the New Economics Foundation (NEF) think tank found that up to 1.1million jobs could be at risk under current plans to roll back the furlough programme at the end of September.

At a glance: 5 key points

– Between 450,000 and 1.1 million jobs could still require support through the furlough scheme when it comes to an end, according to analysis by NEF

– The think tank produce a ‘core estimate’ of 660,000 jobs in which workers could face redundancy or a reduction in pay/hours if the current plans aren’t changed

– Around one third of those jobs currently supported by furlough will not be cost-effective when taking into the additional 20 per cent employer contribution from the start of this month

– NEF is calling on the government to roll back the increase in employer contribution and extend the scheme; establish a permanent replacement scheme which would allow struggling firms to furlough workers during further economic shocks; and allow furloughed workers to use their subsidised non-working hours on training

– The modelling is based on macroeconomic forecasts of GDP level as well as epidemiological analysis

What’s been said?

Alex Chapman, senior researcher at the New Economics Foundation, said: “The current end date for the furlough scheme is arbitrary and can cause unnecessary harm to thousands of workers across the UK, by risking unemployment or facing a reduction in pay.

“Our analysis highlights that demand will remain suppressed because of voluntary measures that the public will take in response to the uncertainty around the delta variant.

“The furlough scheme has been a necessary lifeline for millions of workers, and we strongly urge the Chancellor to retain it beyond September.

“Over time, similar to some of our European neighbours, a more permanent furlough scheme should be introduced that can help the British workforce build resiliency against future economic shocks such as climate disruption, trade realignment and other public health emergencies.”

Speaking to BBC Radio 4 in June, Conservative MP Dame Andrea Leadsome said she felt some people have become too accustomed to furlough support.

She said: “For some people they’re just terrified, so it’s like, ‘I’ve been on furlough for so long, I really can’t quite face going back to the office’ and employers are rightly saying, ‘well, you need to’.

“So there’s that issue, the mental health issue, the fear of it.

“For other people, it’s like, ‘well actually being on furlough in lockdown has been great for me – I’ve got a garden, I’ve been able to go out walking every day, I’ve got great vegetables growing, I don’t really want to go back to work, maybe I’ll think about part-time or I’m going to retire early’.”

Background

Since the country was plunged into the first national lockdown in March 2020, the government has paid workers using the Job Retention Scheme up to £2,500 a month.

The government used to contribute 80% towards pay packets while employers could choose whether to pay an extra 20 percent wage top up - but they did not have to.

From July 2021, government contributions fell to 70 per cent and in August and September the government will only pay 60 per cent towards wages.

The furlough contribution from employers has now risen to 20 per cent, as of 1 August, which will be the case until the scheme closes before October.