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Coronavirus: UK chancellor says 'job done' on furlough despite rising unemployment

Rishi Sunak visiting pottery firm Emma Bridgewater. Photo: HM Treasury / Zara Farrar
Rishi Sunak visiting pottery firm Emma Bridgewater. Photo: Zara Farrar/HM Treasury

Britain’s chancellor declared the furlough scheme has “done what it was designed to” on Tuesday, as he resisted mounting pressure to extend support for hard-hit sectors.

UK finance minister Rishi Sunak pointed to recent official figures showing more than half of furloughed workers had returned to their jobs by mid-August.

Sunak also highlighted the government’s plans to hand employers bonuses for keeping staff and fund youth work placements as the furlough scheme winds down.

But the chancellor faced a flurry of warnings from economists, business chiefs and Labour on Tuesday that a wave of job losses will only continue this autumn without more support for employers.

READ MORE: UK employers have axed 695,000 jobs since March as unemployment rate rises

Paul Dales, chief UK economist at Capital Economics, said the millions of workers still on furlough were more likely to be at risk than those who had already returned to work.

With official figures now showing employers have cut 695,000 jobs since March, the Resolution Foundation said there was already a “mounting jobs crisis.” It called for targeted support for industries still hamstrung by the coronavirus and government rules, including hospitality, the arts and leisure.

Another think tank, the Institute for Public Policy Research (IPPR), warned the government was “taking a huge risk” ending the furlough scheme in October.

The left-wing IPPR backed Labour’s call for a scheme that provided continued support for employers who kept staff on part-time rather than slashing jobs. Training and support should also be provided for those unable to return full-time, Labour leader Keir Starmer said in a virtual speech to the Trades Union Congress (TUC) annual conference on Tuesday.

“This is the path many other countries are taking to stabilise jobs and incomes,” said IPPR associate director Clare McNeil.

Several business groups have also sounded the alarm this week as the official unemployment rate ticked higher. The Confederation of British Industry (CBI) called for a successor to the furlough scheme, in an unusual echo of Labour and the TUC’s position.

Tej Parikh, chief economist at the Institute of Directors (IoD), urged the chancellor to “act quickly to counteract job losses,” calling for the chancellor not to delay his Budget and to slash employer national insurance contributions.

The British Chambers of Commerce (BCC) made the same plea to cut national insurance bills ahead of the furlough wind-down “cliff edge.” Its head of economics Suren Thiru also demanded more support for firms in areas forced into new local lockdowns than government grants announced so far.

READ MORE: UK firms warn on ‘triple threat’ of local lockdowns, Brexit and furlough wind-up

Some business chiefs struck a different tone, however. James Reed, chair of recruitment firm Reed, said it was time for the country to “move on” from the furlough scheme.

“Businesses need to level with their furloughed staff about their future as soon as they are able to,” he said.

The Treasury meanwhile defended its efforts to safeguard jobs in a press release. It called its policies “one of the most generous and comprehensive packages of support in the world.”

Sunak noted the Office for National Statistics (ONS) employment rate had shown an increase, despite also showing unemployment and redundancies rising. “As today’s official employment figures today show, the furlough scheme has done what it was designed to do — save jobs and help people back to work, where they want to be,” he said.

The Treasury highlighted ONS data suggesting only 11% of the workforce remained on furlough in mid-August, compared to 30% in May. It said more than half had returned to workplaces.

“We were clear at the start of the pandemic that we couldn’t save every job, but the furlough scheme has supported millions of workers and we want to help employers keep people on,” added Sunak. “Our job retention bonus will do exactly that, supporting businesses to do the right thing.”