As UK Dismantles Furlough ‘Lifeline’ Gov’t Pledges Efforts to ‘Maximise Employment’

Furlough was introduced in March 2020 to protect millions of jobs during the COVID-19 pandemic, which forced large parts of the economy to close. The UK government had initially been paying 80% of the wages, with employers paying 20%.

The wage-subsidy lifeline officially known as the Coronavirus Job Retention Scheme, or CJRS, that has propped up badly-hit sectors of the UK economy, helping pay the wages of 11.6 million workers, ends on 30 September. It was still supporting the incomes of around 1.6 million workers in late July, according to data from Her Majesty's Revenue and Customs (HMRC), the tax authority of the UK.

The CJRS accounts for approximately one-fifth of the money the government has funneled towards pandemic response.

When we said we’d do whatever it takes, we meant it.

This is the story of Furlough👇 pic.twitter.com/dDwJK0iBz5

— Rishi Sunak (@RishiSunak) September 27, 2021

The UK Chancellor said he was "immensely proud of the furlough scheme, and even more proud of UK workers and businesses whose resolve has seen us through an immensely difficult time".

Britain's Chancellor of the Exchequer Rishi Sunak (R) sits beside Britain's Prime Minister Boris Johnson (C) at a Cabinet meeting of senior government ministers at the Foreign and Commonwealth Office (FCO) in London on September 1, 2020.

© AFP 2023 / TOBY MELVILLE

Sunak launched the near £70bn scheme on 20 March last year, covering 80% of a furloughed employee’s wages - up to £2,500 a month. However, according to the Chancellor, the time had come to wrap it up.

While usage of the scheme peaked in May 2020 to reach almost 9 million, the number of workers on furlough has been steadily declining throughout this year. The figures were driven by easing of lockdown restrictions and reopening of businesses.

There are hopes that workers coming off furlough will be absorbed by the over one million job vacancies in the UK. New figures from the Office for National Statistics (ONS) show there were an estimated 1,034,000 vacancies between June and August this year - the highest number since records began two decades ago. However, employment experts have cast doubt on this, citing mismatches between the registered vacancies and where most workers were furloughed.

Chancellor praises workers as Plan for Jobs enters next stage: The Chancellor @RishiSunak will today (30 September) pay tribute to the resolve of the British public as the Government moves to the next phase of its Plan for Jobs, part of a £400bn support… https://t.co/t8sLcZv2Zn pic.twitter.com/j4hmfjw9Is

— FE News - The #FutureofEducation News Channel (@FENews) September 29, 2021

Furthermore, the Treasury touted the next phase of its "Plan for Jobs" - part of a £400bn spending package.

“Our Plan for Jobs is helping people into work and making sure they have the skills needed for the jobs of the future,” said Rishi Sunak.

Despite emergency support being wrapped up, the UK Government vowed continued efforts to maximise employment. It touted its £2bn Kickstart Scheme, offering jobs to young people at risk of long-term unemployment and continued support for employers to take on apprentices via an amended Apprenticeship Levy transfers system.

Our £2.9bn Restart scheme will offer 1 year of tailored employment support to 1 million people on long-term Universal Credit

The scheme invests around £2,000 in each participant, increasing experience and confidence – another example of our #PlanforJobs supporting people pic.twitter.com/31lXq97L7M

— HM Treasury (@hmtreasury) September 29, 2021

The Recovery Loan scheme, reduced 12.5% VAT rate in the hospitality and tourism sectors and continuing business rates relief were all targeted to help businesses to bounce back, maintained the UK Treasury.

Dismantling of 'Lifeline'

The UK Chancellor Rishi Sunak’s decision to end the furlough scheme introduced amid the economic fallout from the COVID-19 pandemic has been decried by business leaders as fraught with intensifying Britain’s economic problems, according to The Guardian.

Representatives of the country’s unions, business groups, employment experts and politicians have warned against dismantling the emergency pandemic support scheme amid faltering economic recovery compounded by pressures on supply chains experienced over the past few weeks.

The Federation of Small Businesses (FSB) believes that ending the furlough scheme would add to pressure on companies struggling to bounce back.

“It’s potentially a dangerous moment. As the weather turns colder, so too will the operating environment for many firms. With recent economic growth numbers having fallen below expectations, the upcoming festive season may not provide as much of a boost as hoped to many small businesses’ bottom lines,” Mike Cherry, the FSB’s national chair, was quoted as saying by the outlet.

Government ministers have been urged to rethink the end of furlough.

“Many workers in hard hit industries are still furloughed and need support for longer. Otherwise, we may see a rise in unemployment,” Frances O’Grady, the TUC general secretary was cited as saying.

A spokesperson for the Association of British Travel Agents was cited as warning that the sector still faced "extreme difficulties" because of continued pandemic travel restrictions. "The government needs to look at how it can support these businesses - particularly as the furlough scheme comes to an end - through a package of tailored financial support, including extending business rates relief and a specific grant scheme for travel companies," said the spokesperson.

A homeless person sleeps in front of a closed clothing shop in London, Thursday May 14, 2020, as the country continues in lockdown to help stop the spread of coronavirus

© AP Photo / Kirsty Wigglesworth

The Resolution Foundation hailed the scheme as a "great success", critical to fighting the pandemic crisis. However, the think-tank’s recent studies indicated that a rise in unemployment was a "real risk" for those still on the scheme as it ends, particularly older workers. The Bank of England has also said it expected a small rise in unemployment after the scheme ended.

Nevertheless, coming at the same time as growing energy bills and a planned Universal Credit cut back to its pre-pandemic level in October, the end of the furlough scheme “will be tough for many to navigate," warn businesses and unions.