Call for new support scheme to save two million furloughed jobs

Three million jobs are potentially at risk – two million of them viable ones –  if the furlough scheme comes to an end in October and there is no other support available, according to a new report.

The report by the IPPR think tank says the furlough scheme will come to an end before the economic recovery has
begun to take hold, with an estimated three million of the jobs currently still being supported by the scheme still possibly in need of support in October, because of a continued shortfall in demand.

The IPPR estimates that one million jobs currently being supported by the scheme could be lost permanently in the sectors most heavily affected by the crisis so far, such as hospitality, retail, entertainment, manufacturing, support
services and construction. However, we also find that around two million of the jobs would be viable if wage subsidies were extended into sprung 2021 when the Office for Budget Responsibility suggests the economic recovery may begin to be felt.

The report also finds that those facing the greatest disadvantage – whether due to shielding, disability or caring responsibilities – are most at risk of being made redundant.

It proposes that from October the government’s Job Retention Scheme should be replaced with ‘Coronavirus Work Sharing Scheme’ (CWSS) which would encourage businesses to keep their employees in work rather than ‘furloughing’ them, as happens in countries like Germany, France and Denmark. It cites the example of ‘short-time work’ schemes used by several countries to preserve employment during the course of the pandemic. These offer a subsidy for temporary reductions in the number of hours worked in firms affected by temporary shocks.

Only the hardest hit firms would be eligible for the CWSS, says the IPPR, but it would be open to any business in the event of local lockdowns or a second wave of the pandemic. Those who cannot work because of additional caring responsibilities or who are shielding would also be eligible for the scheme, says the IPPR.

It estimates that the cost of the scheme from November 2020-March 2021 would be approximately £7.9 billion, which should be balanced against the cost of Universal Credit if people lose their jobs.

The report also calls for £30 billion a year investment in public infrastructure to help create new jobs and for government to support for workers who need to switch jobs, as well as a range of measures to protect incomes. And it proposes an extension of the ban on evictions for another six months and the maintenance of the . And for those who are out of the emergency increase to Universal Credit. In addition it calls for the removal of the two-child limit on child benefit and the benefit cap and an increase the child element in Universal Credit and tax credits by at least
£20 per week.

Meanwhile, a poll by the Learning and Work Institute and the Carnegie UK Trust finds 54 per cent of employers support an increase in the national living wage (NLW) to two-thirds of the median income by 2024, which is currently estimated to be £10.50 an hour. Just 9 per cent said they were against the move.

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