Calls grow for job retention scheme to be extended
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Calls are growing for Rishi Sunak to extend the government’s coronavirus job retention scheme past June.
The scheme sees the government pay 80 per cent of people’s wages, up to £2,500 a month, for furloughed employees until the end of June.
Boris Johnson next week will announce how the UK will ease social distancing restrictions, however many sectors are expected to be told they must stay shut for several more months.
The Observer first reported today that business groups and Labour are pushing the chancellor to extend its wage subsidy scheme to safeguard businesses and employees.
Institute of Directors Tej Parikh said: “Getting the economy running again won’t be like flicking a switch. Even if lockdown measures were completely lifted, many firms wouldn’t expect demand to lift to normal levels immediately.
“A sharp removal of the furlough scheme at the end of June could cause significant problems for some businesses, so the government should explore how it could taper off the system in a flexible way.”
City A.M. understands that the Treasury is currently discussing various options for how the scheme will end or if it will be extended.
A Treasury source said it would heavily depend on what Downing Street’s coronavirus lockdown exit strategy looked like.
Writing in the Observer, shadow business secretary Ed Miliband called for a second wave of economic support packages.
He said: “Essential public health measures must be accompanied by economic help. The government must act urgently with a second wave of support, including, where necessary, an extension of the furlough scheme – with greater flexibility to enable part-time working – and it must look again at the gaps in current schemes.”
As of 24 April, 512,000 businesses representing 3.8m furloughed employees had applied for the scheme.
The total value of these applications is £4.5bn.
The Office for Budget Responsibility (OBR) estimates it will cost £49bn if it runs until June.