Wednesday, 21 Oct 2020

Furlough disaster: PM urged to extend scheme as widespread ‘redundancies’ expected

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Workers across England were thrown into despair yesterday after Prime Minister Boris Johnson announced sweeping new restrictions amid a rise in coronavirus cases. It came as he said the UK has reached “a perilous turning point”. The biggest grievances have largely shifted onto the hospitality sector, with pubs, bars and restaurants now restricted to table service only and having to shut their doors at 10pm.

Many now fear that the move will discourage revellers from visiting food and drink venues, which will drive sales down and force proprietors to lay-off staff.

Added to this is the fact that the furlough scheme is coming to an end on October 31.

During the Prime Minister’s statement to MPs, Labour leader Sir Keir Starmer praised Mr Johnson’s decision to implement the new restrictions, although he poked holes in the dynamic behind the move, describing it as leaving a “big gap”.

Sir Keir asked Mr Johnson what emergency support would be available to those who work in the hospitality sector and face potential unemployment, and said: “Does the Prime Minister accept that withdrawing the furlough scheme in one swoop will be a disaster, and actually at complete odds with the measures he’s just announced for possibly up to six months?

“And will he take us up on the offer to work with him and trade unions and businesses on a replacement scheme that projects jobs and businesses?”

Mr Johnson in his reply made reference to the furlough scheme but failed to directly address how workers affected by the new restrictions will be aided going forward.

Economists and finance experts have long warned that any notion of further restrictions or a second national lockdown could hit Britons far worse than the first time round, as the Government currently has no plan to cushion economic fallout in the event.

Many others, like Mark Littlewood, the director general of the Institute of Economic Affairs (IEA) have pointed towards the Government’s plan to reward employers for keeping their staff on past the furlough scheme end date – a move which he told would likely result in mass redundancies.

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Currently, Government policy states that it will provide a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021, with payment made from the following month.

This, Mr Littlewood said, will result in “reality biting” for employers and employees across the UK.

He said: “We’re yet to really feel the effects of the lockdown yet because the Government’s strategy has been not to flatten the curve of COVID-19 but to flatten the curve of recession.

“The furlough scheme ends after October, and then we’ve got the box-on for employers who will get a £1,000 bonus per employee next February.


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“I’m not an economic forecaster, but I’m expecting a lot of redundancies on February 1, 2021.

“You might be keeping your staff on life support at the moment because the Government’s intervening but at some point reality bites.

“I think as we emerge from lockdown it is not necessarily then that we are going to see the spring of impact because furlough will end, a lot of companies will turn out not to be viable and I think this coming autumn is going to be very bleak indeed for the economy.

“We could see very substantial job losses and increased business closure.”

The Chancellor Rishi Sunak is reportedly weighing up plans to replace the furlough scheme with a German-style wage subsidy.

This would be in order to support businesses through a renewed bite of COVID-19.

It would involve the Government paying the wages of workers for short-time working.

Mr Johnson and his cabinet appear to be resisting enforcing a second national lockdown.

Sir Keir yesterday condemned the Government for doing so, claiming that another should not be totally written off as cases soar around the country.

Mr Johnson has, however, warned “significantly greater restrictions” could come if necessary.

He said “similar steps” would be taken across the UK after he met with the leaders of Scotland, Wales and Northern Ireland on Tuesday morning.

Mr Johnson said the new rules were “carefully judged” to achieve the maximum reduction in the R number.

The latest R estimated for the whole of the UK suggests the country is somewhere between 1.1 and 1.4.

Mr Johnson said: “We will spare no effort in developing vaccines, treatments, new forms of mass-testing but unless we palpably make progress we should assume that the restrictions that I have announced will remain in place for perhaps six months.”

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