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Rishi Sunak eyes wage 'top-up' scheme as furlough ends

Russell Lynch
·2-min read

The Treasury is working on plans for a successor to the furlough scheme to fend off a wave of unemployment in the autumn.

The fresh restrictions announced by Boris Johnson on Tuesday - which could last as long as six months - were greeted with shock by sectors like hospitality still dependent on the £47bn scheme due to the lack of details on future support.

Labour leader Sir Keir Starmer has warned of a “disaster” if the scheme comes to an abrupt halt at the end of October while Mr Johnson has said Chancellor Rishi Sunak will show “imagination” and “creativity” in protecting jobs. 

But work in the Treasury is under way looking at the possibility of the state subsidising the wages of workers able to work 50-60pc of their normal hours, according to the Financial Times

Chancellor’s measures to fight Covid-19
Chancellor’s measures to fight Covid-19

No decisions have yet been taken on the future of the furlough successor, which would be akin to the German Kurzarbeit scheme and similar to measures called for by Labour. 

The Treasury, which is said to be looking at schemes in France, Germany and Spain, declined to comment. 

A senior industry source told The Telegraph: “We don’t know the details yet but we have had good conversations on this with the Treasury for a while now. The penny has dropped a bit, that they have to do something.

“There are tactical questions - you could do it by sector but it’s clumsy. What do you do about suppliers supplying into a certain sector? It is not impossible but harder than you might think.

“There are other ways to do it and that is to make it available for everybody. They would have either a front-end proof of need, like VAT receipts or profits, or a back-end potential clawback if you didn’t need it after all.” 

The CBI’s proposals include a state subsidy for workers able to work at least 50pc of their working hours. A third of the bill for the non working hours would be paid for by the taxpayer. Firms would choose between the CBI’s model and the Chancellor’s £1,000 job retention bonus under the business lobby group’s proposals. 

Under the original furlough employees were paid 80pc of their salary up to £2,500 a month, but the scheme has been tightened since the end of July.

The 45-day consultation period needed on major job cuts has prompted a fresh round of redundancies to coincide with the end of the furlough, including 6,000 at Premier Inn owner Whitbread this week.