Rishi Sunak weighs up possible furlough scheme replacements amid UK unemployment fears
The Chancellor is said to be considering different schemes ahead of a major announcement tomorrow.
Rishi Sunak is said to be weighing up a new scheme dubbed ‘Furlough 2.0’ to avoid mass unemployment, ahead of a major speech to Parliament tomorrow.
The Chancellor is thought to be considering introducing a German-style scheme as part of a wider emergency support programme, as pressure mounts on the Government to help businesses survive a second wave of coronavirus.
He has been urged to ‘get around the table’ and fast-track new job support plans amid reports he is working on a new plan as the furlough scheme comes to an end.
The initiative would reportedly see the Government and firms share the cost of topping up wages for employees only able to work part-time due to the pandemic.
It comes as the Chancellor cancelled the 2020 budget to allow Mr Sunak to focus on his ‘winter economic plan’.
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Mr Sunak has pledged to be ‘creative’ and is understood to be weighing up a number of possible measures to subsidise workers’ wages, having consulted with unions and business groups.
It is thought he postponed an announcement due on Wednesday to extend emergency loan schemes in favour of a bigger support package.
One option reportedly being considered is a scheme similar to Germany’s highly-praised Kurzarbeit, or shorter work-time policy, under which firms can radically cut working hours in economic downturns with the state replacing part of their lost income.
Calls have grown for a new lifeline for businesses after Boris Johnson yesterday announced six months of tougher restrictions threatening the economic recovery, as fears grow of mass unemployment when furlough ends on October 31.
On Tuesday the Governor of the Bank of England governor Andrew Bailey urged the government to ‘stop and rethink’ the furlough scheme in favour of a targeted approach.
And the Trades Union Congress (TUC), which outlined its furlough replacement proposal last month, said the Government must ‘fast-track a new plan’ to protect jobs.
General secretary Frances O’Grady said: ‘We have published detailed proposals for a new short-time working and upskilling scheme.
‘With the right approach we can stop mass unemployment scarring millions.
‘My message to ministers is clear: let’s get around the table and fast-track a new plan.’
The TUC scheme calls for workers to receive 80% of their salary for the hours they are not in work.
Companies would get a 70% subsidy from the Government, provided they bring back every worker on the scheme for a minimum proportion of their normal working hours.
Another proposal put forward by the CBI business group would see subsidies for firms that can offer staff at last 50% of their normal hours, with the cost for non-working hours shared equally by the company, the Treasury and the employee.
The Treasury declined to comment, while Number 10 also refused to be drawn on Mr Sunak’s plans.
The Prime Minister’s official spokesman told reporters: ‘We have always said that we keep our support under review and that it will be adapted as the circumstances evolve.’
The furlough scheme has cost the Government £39.3 billion to date, with £3.9 billion between August 16 and September 20 alone, according to the latest figures.
More than £13 billion has been handed to firms and workers through five different Government support schemes in the last month.
John Phillips, acting general secretary of the GMB union, said: ‘Other countries have made a head start in offering support, protection and reassurance to industries as our economy stands on the edge of the abyss.
‘The Treasury has promised creative action in this extended, unprecedented period – but time is short.
‘Ministers must target support for industries, support for incomes and take action to save jobs.’
A source close to the Treasury said: ‘The Chancellor has shown he has been creative in the past and we hope that people will trust us to continue in that vein. Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.’
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