RISHI SUNAK’s big spend Budget revealed earlier this week that schemes such as furlough and SEISS are here to stay beyond the proposed end of lockdown restrictions. But many are still fearful of what’s to come when the Chancellor finally ends the support.
The Chancellor has made no secret of the fact he cannot save every job. Rishi Sunak said: “Our Covid support schemes have been a lifeline to millions, protecting jobs and incomes across the UK. There’s now light at the end of the tunnel with a roadmap for reopening, so it’s only right that we continue to help business and individuals through the challenging months ahead – and beyond.”
Despite the fact the extension has been welcomed and will be a chance for businesses to catch their breath following the worst of the pandemic and before support comes to an end, job losses are still likely to be inevitable in the autumn.
Hundreds of thousands of jobs were lost in October when the Chancellor left it too late to announce an extension to the scheme in the face of mounting new cases and an inevitable lockdown on the way.
With the extension and amendments to the scheme, the Chancellor is looking to soften what will be an inevitable blow to jobs across the country.
As the furlough scheme progresses, support will taper down, with employers being asked to contribute 10 percent towards the hours staff do not work in July and this will increase to 20 percent in August and September.
Gary Hemming told Express.co.uk: “When the furlough scheme looked to be coming to an end in October, just prior to the extension, 314,000 people were made redundant.
“At that point there were 2.4 million furloughed people in the UK, meaning 13.08 percent of furloughed workers were made redundant as the deadline loomed.
“Of course, the scheme was extended as the redundancies began, so we’ll never know the true scale of redundancies that would have otherwise happened.
“The real concern is that we now have 4.7 million people furloughed in the UK, and even a similar level of redundancies would result in another 614,760 people being made redundant in the UK.
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“Of course, the figures in November may well have ended up being worse had the scheme not been extended, which means that sadly, the figure of 614,760 predicted for September may well be far lower that the reality.”
Peter Nicholson, senior associate and solicitor specialising in employment law at Nelsons, said: “There are very few who would argue that the furlough scheme has not saved a significant number of jobs during the coronavirus pandemic. However, the big question now is how many jobs will be saved when it comes to an end in September this year.
“According to the latest government statistics, published on 25 February 2021, around 4.7 million jobs were furloughed as of 31 January this year, with an estimated 28 percent of these being ‘partial’ or ‘flexi furlough’ – where the employee is working part time or limited hours.
“The Office for Budget Responsibility (OBR) forecasts that the unemployment rate will peak at 6.5% in the fourth quarter of 2021, when the furlough scheme closes.
“However, that is an improvement on the previously forecast peak of 7.5 percent that was released in November last year.
“Realistically, while the furlough scheme has saved a considerable number of jobs so far, I expect there will be a significant number of job losses when it closes in September. It’s difficult give a definite figure as to how many redundancies there will be, as this depends on how the economy reacts as restrictions are lifted.”
The extension of the furlough scheme has been widely praised by the public and by businesses and business leaders to stop a sharp rise in unemployment.
Lee Murphy, managing director at The Accountancy Partnership said: “The decision to extend furlough to the end of September will no doubt be a welcome relief for businesses with employees.
“An abrupt end to the Coronavirus Job Retention Scheme (CJRS) could have resulted in thousands of lost jobs, so it is great to see this recognised in the Budget with a continuation of the support which has protected more than 11 million jobs so far.
“The furlough extension allows businesses to forward plan how they manage their employees for the remainder of the restrictions and beyond, without being forced into difficult redundancy decisions.
“With five months between now and August, businesses have adequate time to consider cash flow and, if all goes to plan with the gradual reopening, many businesses will be trading by then to support the businesses contributions to furloughed staff.
“It may be that even with the support available, there are still difficult decisions to make about prioritising the retention of those highly skilled workers who will most benefit the recovery of the business.
“Extending the CJRS to the end of September, beyond the planned end of restrictions in June, will give businesses the time and economic support they need to get back on their feet while the economy reopens, as this will not happen overnight.
“It is reassuring that the government is offering this support as it could be critical to many businesses’ viability during the reopening.”
Some however, have been less receptive to the support packages provided by the Chancellor.
Martin Taylor, Co-Founder Deputy CEO of Content Guru told Express.co.uk: “Keeping the job retention scheme running is risking the UK becoming a zombie economy of companies that are not viable but continue to exist on life support.
“Furlough is expensive. Some businesses are not viable but are keeping staff on for the time being as a ‘service’ to them and the country.
“However, it means that these people are not re-introduced to the job market where there are real shortages.
“What’s needed is retraining and reskilling.”
By ALISS HIGHAM
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