Employers to be rewarded for keeping on furloughed staff

Chancellor Rishi Sunak has announced that employers who keep on furloughed staff will be able to benefit from a £1,000 bonus.

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The Government is to offer any employer who brings someone back off furlough, and keeps them in a job until January, a £1,000 bonus in a bid to prevent mass redundancies, the Chancellor announced today.

Rishi Sunak told the House of Commons today that firms must pay employees at least £520 each month to qualify for the bonus. If everyone on furlough was to benefit, it would cost £9bn in total.

The Institute for Fiscal Studies [IFS], however, said the money was poorly targeted and that most would be spent on jobs that were already safe.

Sunak also announced job creation schemes for young people, a six-month 15% VAT cut for the hard-hit hospitality and tourism sector, worth £4.5bn and a £2bn new green homes grant to improve energy efficiency, saving money on energy bills and creating new jobs.

For those who lose their jobs, Sunak said the number of work coaches in job centres would be doubled, promised more funding for careers advisers and traineeships and said the DWP would get an extra £1bn for schemes to get people into work.

For younger workers under 25, Sunak announced a £2bn ‘kickstart’ scheme which will pay young people’s wages for up to six months from September, amounting to a grant worth around £6,500 per young person. The number of places available will not be capped. There will also be a new £2,000 payment for firms to take on apprentices.

Sunak also said there would be a one-month “eat out to help out scheme”, offering customers a discount worth up to £10 per head when they eat out from Monday to Wednesday in August. The IFS said, however, that it was public health issues that were preventing people eating out en masse.

Reaction

Once again there was no mention of the struggling childcare sector despite numerous warnings that nurseries could face closure because of reduced numbers of parents sending children in and ongoing maintenance costs.

Neil Leitch, chief executive of the Early Years Alliance, said: “It is unfathomable that the government has once again failed to commit to any additional financial support for the early years sector. With one in four nurseries, pre-schools and childminders fearing closure within the year, rising to one in three in the most disadvantaged areas, it is clear that inaction is not an option – and yet the government continues to ignore the fact that the childcare sector in this country is in crisis.”

Caroline Nokes, Chair of the Women and Equalities Committee, said: “There is much in the Chancellor’s announcement to be welcomed. However, the lack of focus on using his three-point plan to boost gender equality is a missed opportunity. Whilst the Chancellor has said that measures aimed at hospitality and tourism sector will benefit women and BAME people, the three most common sectors for women in the UK to work in are health and social care; retail and wholesale; and education. There was no mention of helping businesses in sectors where women are disproportionately represented and which remain shut down, for example, the beauty industry.”

She added: “There were no specific measures aimed to help workers in these sectors. It was disappointing to hear no mention of government support for the childcare sector, which predominantly employs women. We know that affordable, reliable childcare is key in enabling women to return to work and stay in work…The Government must focus its attention on targeted interventions to reduce, rather than inadvertently exacerbate, gendered economic inequalities.”

The Institute for Employment Studies welcomed the announcement, saying it recognised the scale of the employment crisis the UK is facing, but said it was almost certain unemployment would rise above three million in the next year.  It said the furlough retention bonus “should make a real difference for many firms in industries that have been hit hard by the crisis, and will be particularly well targeted at supporting lower paid workers at risk of job loss” and welcomed investment in ‘tried and tested’ ways of helping people back to work.

Nevertheless, it called on the Government to reach out to private recruiters to help the unemployed back to work, to local authorities and the voluntary and community sector and to consider the additional employment issues faced by those with health conditions and disabled people.  There is also concern that investment in further education and the ‘kickstart’ subsidy may not be enough, given its maximum value will be a third lower than that offered through the Future Jobs Fund, but is intended to create four times as many jobs.

Meanwhile, Rustom Tata, Chairman of city law firm DMH Stallard and head of the employment group, said: “The new arrangements will no doubt help some employees, but in the context of a furlough scheme that paid 80% of average salaries, albeit up to a maximum of £2,500 per month, a one off payment of £1,000 to keep someone employed until the end of January might seem largely inconsequential for most employers considering whether or not to go ahead with substantial redundancies.”

TUC General Secretary Frances O’Grady stated: “Mass unemployment is now the biggest threat facing the UK, as shown by the thousands of job losses at British Airways, Airbus and elsewhere. The government must do far more to stem the rising tide of redundancies. We can’t afford to lose any more good skilled jobs.

“The Chancellor should have announced targeted support for the hardest-hit sectors like manufacturing and aviation. Struggling businesses will need more than a one-off job retention bonus to survive and save jobs in the long-term.”

And IPSE (the Association of Independent Professionals and the Self-Employed) said there was no mention of the self-employed and urged the government to introduce a “tapered end” to the Self-Employment Income Support Scheme, similar to that for the furlough scheme, to ensure freelancers do not face a “cliff-edge” in August.

*On Thursday the Government announced plans to reopen gyms, swimming pools, outdoor gigs and nailbars over the next weeks.



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