Industry official warns of spike in redundancies when coronavirus furlough scheme ends | UK | News

In May, the Treasury announced that the UK’s coronavirus Job Retention Scheme – which is supporting businesses in paying furloughed workers – will end in October.

Although workers should still receive 80 per cent of their current salary until then, concerns have been raised about what will happen afterwards.

Dame Carolyn Fairbairn, Director-General of the CBI, has said that as support schemes begin to draw to a close later this year, joblessness will rise.

In a letter to Prime Minister Boris Johnson, Dame Fairbairn wrote: “Redundancies will rise fast over the autumn as support schemes, especially the Jobs Retention Scheme, wind down.”

While this will be an issue in itself, redundancies may affect some parts of society more than others, the CBI head explained.

She continued: “Past recessions show that joblessness is deeply uneven.


Dame Fairbairn addressed her concerns in a letter to the Prime Minister. (Image: Adrian Dennis / AFP / Getty)

“Without immediate intervention, pre-crisis inequalities across regions, gender, and race will worsen. Long term unemployment will leave generational scars.

In response to these concerns, the CBI yesterday published several proposals that the government could consider implementing.

These suggestions cover three broad areas, which are: job creation; investing in the ‘green economy’; and targeted financial support to ‘kick-start consumer demand.’

Specific proposals include a ‘future skills fund’ which would support areas with high job potential “such as digital, low carbon and health”.

READ: US Treasury warns economy cannot take a second shutdown

rishi runak

Chancellor Rishi Sunak at the end of May confirmed the furlough scheme would be gradually withdrawn. (Image: Matt Dunham / WPA Pool / Getty)

Another suggestion put forward by the CBI is investing in the greater uptake of electric vehicles, through specific proposals such as a temporary scrappage scheme and funding for charging points.

The Confederation also called for business rates relief to be extended to “mid-sized businesses in all sectors to reduce fixed costs.”

The CBI’s Dame Fairbairn continued: “A world class test and trace system is the foundation for a UK that is safe to visit, invest in, work and study in.

“Time is of the essence. Smart, fast policy is needed now to accelerate the process to minimise the human cost and in particular protect the futures of our young people.


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waiting for tube

Furloughed workers will be allowed to return to work part time at the start of July, according to reports. (Image: Alex Robinson Photography / Getty)

“Together with our members and in consultation with the unions, the CBU has developed simple, implementable proposals that can be acted on now to create the best possible recovery.”

Since the government announced it would end the furlough scheme in October, some changes to the way it works have been announced.

For example, from the start of next month, businesses that use the scheme became able to bring furloughed employees back part-time.

But for staff who remain on furlough for the remainder of the year, nothing much will change. What will change, however, is how much their employer has to pay to keep them on furlough.


A withdrawing of government support could see redundancies rise, the CBI has said. (Image: Kiyoshi Hijiki / Getty) reports that starting August, employers will now have to pay national insurance and pension contributions for staff, though the state will continue to cover all 80 percent of wages.

Come September though, the state will begin to only cover 70 percent of wages, requiring employers to pick up the remaining 10 percent.

This ratio shifts even further in October, when the government will pay 60 percent of wages and employers 20, before the scheme is dropped altogether.

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