The Chancellor faces a blizzard of tough decisions on Wednesday, when his Budget speech will among other things include an update on the furlough scheme currently providing a financial lifeline to millions of people across the UK.
It is widely expected that Rishi Sunak will confirm an extension to the coronavirus job retention scheme (CJRS), particularly after Prime Minister Boris Johnson assured last week that “we will not pull the rug out” on emergency income support measures currently due to expire at the end of April. The PM’s comments were in conjunction with his roadmap for possibly lifting all Covid restrictions in England by June 21, whereas in Scotland the indications are that easing will be a slower and more extended journey.
The big question is what form this next iteration of furlough will take, and how long it will run for. The Chancellor will want to avoid as much as possible any surge in unemployment, but according to figures released last week by HMRC, the cumulative cost of furlough since its introduction a year ago today has hit £53.8 billion. With an urge to get the public finances in order, he will be reluctant to give any extensive commitments on CJRS.
Recent media reports have suggested he will extend furlough by as little as one month and perhaps no more than three, taking the programme to the end of July. By contrast, many business leaders are pressing the case for a substantially lengthier runway.
READ MORE: Two million people have not worked in six months and millions more expect to lose jobs by May
“Furlough, or the successor to it, needs to continue for a minimum of nine months, and thereafter should be consistently reviewed based on the rate of economic recovery and the employment situation,” said Liz Cameron, chief executive of the Scottish Chambers of Commerce.
“It should be targeted to those businesses and sectors that have been damaged the most. This requires a holistic approach to include those who have been forced to shut down completely, or were first to close and last to open up … or which had restrictions placed upon them which have greatly damaged their chances of survival.”
Getting the timing right will be tough, but the numbers illustrate what’s at stake, with the use of furlough across the UK having increased steadily since November to reach 4.7 million jobs as of January 31, according to latest provisional figures.
It’s been the same in Scotland, with the number of furloughs rising to 228,300 by November 30, and again to 288,900 on December 31, and again to 362,300 on January 31. That’s almost three times the number of people officially classified as unemployed in Scotland by the Office for National Statistics.
The Scottish Licensed Trade Association (SLTA) says nearly 90 per cent of the 280,000 jobs across the country’s hospitality and tourism sector are currently furloughed, with industry estimates of 50,000 to 60,000 jobs lost already, including seasonal staff.
“Furlough needs to be extended into next year as even with the lifting of operating restrictions our sector will still have to comply with social distancing measures and therefore restricted capacity will curtail the ability to operate viably and revert to pre-Covid staffing levels,” SLTA managing director Colin Wilkinson said.
CBI Scotland director Tracy Black said though there is “finally some light at the end of the tunnel”, jobs and livelihoods remain at risk. She believes CJRS should be extended “at least” to the end of June, with tapered support thereafter accompanied by an extension to other measures such as VAT deferrals.
READ MORE: Restaurants and pubs call for furlough to last into 2022
“Ultimately, as long as restrictions of any kind remain in force, these must be matched with business support from both the UK and Scottish governments,” Ms Black said.
Furlough alone will not be enough to preserve jobs, employers argue, with other assistance such as deferrals on VAT and National Insurance contributions also within the Government’s jurisdiction. Many businesses will also require more time to repay Government-backed loans.
“We need to prevent a tidal wave of unemployment,” FSB Scotland policy chair Andrew McRae said. “That means ensuring that sufficient business support remains in place as long as firms face major coronavirus restrictions.
“The Chancellor’s job this week is to detail how he’ll help local firms get through the last leg of this crisis, while the Scottish Government must look for opportunities to pull the finish line closer.”
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