The governor of the Bank of England (BoE) has called on the Government “to stop and rethink” the furlough scheme as the use of it has become “more concentrated”.
Andrew Bailey, whilst speaking on a webinar hosted by the British Chambers of Commerce (BCC) made the suggestion that certain sectors could benefit from a targeted furlough system.
Back at the beginning of August, Mr Bailey did agree with the Chancellor of the Exchequer, Rishi Sunak to close the furlough scheme at the end of October. At the time, Mr Bailey said winding down the furlough system is the right move and keeping employees in unproductive jobs is not going help. Mr Bailey added that it is inevitable that some roles will be made redundant.
However, Mr Bailey made it clear that he does not want to “tie the chancellor’s hands” by making these suggestions now as these are the Governments decision to make.
Mr Bailey said:
We have moved from a world of generalised employment protections, to specific and focussed areas.
It would be completely inappropriate of me to do anything to tie the chancellor’s hands, it’s a very difficult situation we’re in at the moment and I fully support the decisions that he’s taken.
Furlough has been successful and I congratulate the chancellor.
It has helped manage the shock, to firms and to labour. The use of it now, as far as we can tell, is more concentrated.
Richard Churchill, a partner at Blick Rothenberg, a tax and advisory firm seems to agree with Mr Bailey’s suggestion as he said:
Any extension of the CJRS should be in a targeted manner and focus on specific sectors including seasonal businesses for which this sort of approach is critical if they are to survive.
The National Institute of Economic and Social Research (NIESR), an independent economic research institute predicted that closing the furlough scheme at the end of October could result in unemployment reaching 10 per cent this year.