UK scales back Covid-19 furlough scheme costing £14bn a month

British chancellor announces lower wage supports and plans to stem unemployment

Britain’s Chancellor of the Exchequer Rishi Sunak at a remote press conference in 10 Downing Street, May 29th. Photograph: Andrew Parsons/AFP via Getty

Britain’s Chancellor of the Exchequer Rishi Sunak at a remote press conference in 10 Downing Street, May 29th. Photograph: Andrew Parsons/AFP via Getty

 

British employers will have to contribute to the cost of the coronavirus furlough scheme from the start of August, taking on a bigger share of the burden in subsequent months. Chancellor of the exchequer Rishi Sunak said the government would continue to pay 80 per cent of furloughed workers’ pay in August but employers would pick up the cost of national insurance and pension contributions.

From September, the government will pay 70 per cent of a furloughed worker’s salary, with employers paying 10 per cent. In October, the government’s share will fall to 60 per cent, with employers paying 20 per cent.

“We stood behind Britain’s businesses and workers as we came into this crisis and we stand behind them as we come through the other side. Now, as we begin to reopen our country and kickstart our economy, these schemes will adjust to ensure those who are able to work can do so, while remaining among the most generous in the world,” Mr Sunak said.

From the beginning of July, furloughed workers will be allowed to be brought back to work part-time, a move business groups have pressed for as sectors such as non-essential retail prepare to reopen in the middle of June. Some 8.4 million people working in more than a million companies have benefited from the furlough scheme since March, at a cost of about £14 billion (€15.5bn) a month.

Benefits

Business groups welcomed the chancellor’s announcement, although the Confederation of British Industry (CBI) said that sectors such as leisure, hospitality and the creative industries might need more help in the coming months. Labour’s shadow chancellor Anneliese Dodds welcomed the decision to allow furloughed workers to return to jobs part-time without losing all the benefits of the scheme.

“However, it is concerning that there is no commitment within these plans for support to only be scaled back in step with the removal of lockdown. Nor is there any analysis of the impact on unemployment of a ‘one size fits all’ approach being adopted across all sectors.

“The chancellor must publish the evidence behind these decisions to provide reassurance that his proposals won’t cause an additional spike in unemployment, and an even more difficult economic recovery from this crisis,” she said.

The chancellor’s announcement came as Britain’s death toll reached 38,161, with 324 new deaths reported on Friday. From next Monday, groups of up to six people will be allowed to meet outdoors in England, including in private gardens.

But with new Covid-19 infections in England running at 8,000 a day, John Edmunds, one of the infectious diseases experts advising the government, said it was too soon to loosen the lockdown.

“The issue is, clearly there’s a need to try and get the economy restarted and people back to their jobs and so on, and also there’s a social and a mental health need to allow people to meet with their friends and families,” he said.

“I think many of us would prefer to see the incidence driven down to lower levels because that then means that we have fewer cases occurring before we relax the measures. I think at the moment, with relatively high incidence and relaxing the measures and also with an untested track and trace system, I think we are taking some risk here.”

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