Extending flexible furlough is 'just delaying the unfortunate inevitable': Nick Ferrari

Nick Ferrari, breakfast show host on Leading Britain’s Conversation (LBC) radio said on his show that extending the flexible furlough scheme is just “delaying the unfortunate inevitable”.

Rachel Statham, a senior research fellow at the Institute for Public Policy Research (IPPR) thinktank said the Government should extend the flexible furlough scheme to keep more people in work.

In response to this Mr Ferrari said:

How would it be paid for? Aren’t you just delaying the unfortunate inevitable?

Because a lot of people who are currently furloughed, actually they are unemployed, they just don’t know it yet. So why extend it?

We continue to pay millions of people billions of pounds to do no work? When ultimately do we pay for this scheme that’s cost already more than £30billion?

Mr Ferrari also asked his guest that if we extend the furlough scheme further then when will it actually end?

On 28/07/20 the National Institute of Economic and Social Research (NIESR), an independent economic research institute predicted that the end of the furlough scheme at the start of November could result in unemployment reaching 10 per cent this year (2020).

Currently, 9.5 million people are using the scheme which translates to a cost of £31.7 billion for the Treasury.

NIESR also believes the UK economy could shrink by 10 per cent as well and will not recover until 2023. According to the Office for National Statistics (ONS) the unemployment rate for the UK between March to May was 3.9 per cent.

Garry Young, deputy director of the NIESR said:

The planned closure of the furlough seems to be a mistake, motivated by an understandable desire to limit spending.

The scheme was intended by the chancellor to be a bridge through the crisis and there is a risk that it is coming to an end prematurely.

The scheme has been an undeniable success in terms of keeping furloughed employees attached to their jobs.

Unemployment is going to rise to about 10 per cent by the end of this year, before dropping back next year, and we think that an extension of the furlough scheme would have been a relatively inexpensive way to limit that rise in unemployment.

Ms Statham believes the “looming unemployment crisis” the UK may be facing when the scheme ends justify extending the flexible furlough scheme.

Ms Statham said:

The cost of keeping people in employment even on reduced hourly basis is indefinitely better than the cost of rising unemployment.

On 29/05/20 Rishi Sunak, Chancellor of the Exchequer announced that employers will start having to pay towards the cost of the Coronovarius Job Retention Scheme (CJRS), from September companies must pay 10 per cent and then 20 per cent in October of the 80 per cent of wages the furlough scheme entitles to employees.

The amendments to the scheme outline that employers will also pay National Insurance Contributions (NICs) and pension contributions from August onwards. Workers will be allowed to work part-time whilst on furlough from 1st July instead of 1st August which was previously announced. Employers have to pay the full amount of salary for the time worked where the CJRS will cover 80 per cent of the remaining days that did not see the employee at work.