A cross-party group of MPs believes Rishi Sunak, Chancellor of the Exchequer “should carefully consider targeted extensions” of the furlough system to assist certain industries in financial trouble.
This comes following the Treasury Select Committee published its second report in to the economic consequences of COVID-19 which it believes could lead to long-term unemployment and respected companies going out of business.
It does not feel that the Government should provide an extended furlough system that provides blanket support as the first system did.
The report states that Mr Sunak should strongly consider extending the furlough system to particular businesses beyond October.
The scheme so far has cost the Treasury £35 billion.
Make UK, found that 62 per cent of manufacturers surveyed either agree or strongly agree that the Job Retention Scheme (JRS) should be extended beyond October.
Thus far, both Prime Minister Boris Johnson and Mr Sunak have ruled out any extension to the scheme. When the furlough scheme, was first launched, the Government would pay 80 per cent of an employees’ wages, from September the staff members company had to pay 10 per cent of that figure and from October 20 per cent.
Jacob Nell and Bruna Skarica, two Morgan Stanley economists have predicted that the Government will extend the scheme. However, it will be “less generous and more targeted”. Germany, France and Austria have either extended their support to the job market or created a new form of relief for employees during the pandemic.
Mel Stride, chair of the Treasury Select Committee and Conservative MP, said:
The chancellor should carefully consider targeted extensions to the Coronavirus Job Retention Scheme and explain his conclusions.
The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy.
This requires a very difficult set of judgements; it is where careful analysis and creative thinking will be critical.
Today (11/09/20) the Office for National Statistics (ONS) that the UK economy grew by 6.6 per cent in July, however, this is still far lower than pre-pandemic levels.
In response to this Frances O’Grady, general secretary of the Trades Union Congress (TUC) said:
The big danger now is that the recovery loses momentum because of a surge in unemployment when the job retention scheme ends. The government must not throw away the good work of the scheme by ending it too abruptly. We need a successor scheme for businesses with a viable future that need support for longer.