Furlough: Job uncertainty as £70 billion furlough scheme draws to end

The £70 billion furlough programme ends on Thursday after supporting millions of UK workers over the past 18 months.

However, uncertainty remains for the future of almost one million workers who were expected to be still receiving support through the financial scheme at the end of September, according to the latest Office for National Statistics (ONS) estimates.

Economists have warned that although many may find work in recovering sectors such as hospitality and travel, there is also likely to be a rise in unemployment due to new redundancies.

Hide Ad

Chief Secretary to the Treasury Simon Clarke has said that job losses due to the end to furlough was “part of the process” of ending the coronavirus crisis.

Hide Ad

“Obviously there will be a variety of outcomes, I don’t have an estimate with me today. There will be some job losses,” he told Sky News.

“Furlough has protected 11.6 million jobs in total … at some point you have to end these emergency measures.

Hide Ad

“People’s jobs will be created just as some have very sadly been lost, that is part of the process of ending this crisis and going back to normal.”

Alan Custis, head of UK equities at Lazard Asset Management, said the rate of unemployment, which dropped to 4.6 per cent last month, is likely to swing higher again.

Hide Ad
The £70 billion furlough programme ends on Thursday after supporting millions of UK workers over the past 18 months. (Picture credit: Dominic Lipinski/PA Wire)

“There will also be a percentage who choose retirement over returning to work, but we would expect the unemployment rate to settle at around 5 per cent for the year end, before falling in 2022,” he said.

Hide Ad

The end of furlough also comes amid record UK vacancy figures, with the latest Office for National Statistics data for August reporting more than one million available jobs for the first time on record.

There have also been significant hiring sprees amid labour shortages for HGV drivers, warehouse staff and food production workers.

Hide Ad

Nevertheless, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said he has “doubts” as to whether broader consumer demand will have jumped enough by October to re-employ all staff who remained on furlough.

As a result, the Liberal Democrats have called for furlough support to be extended for the 10 most affected sectors to avoid a “tidal wave” of job losses.

Hide Ad

In a letter to Mr Sunak, Liberal Democrat Treasury spokesperson Christine Jardine said furlough should be extended for another six months for the 10 sectors, which include air travel and photography, in a move it claims would cost around £600 million.

Ms Jardine said: “The withdrawal of furlough risks having a devastating impact on countless families already facing a winter of soaring energy bills.

Hide Ad

“The Government needs to rethink its approach or the country could face a Coronavirus Black Thursday.”

Read More
UK Government accused of 'poaching' Scottish ambulance staff to shore up HGV sho...
Hide Ad

However, leaders at trade bodies for heavily impacted sectors are now looking beyond the furlough scheme to appeal for policy reform in other areas.

Kate Nicholls, chief executive of UKHospitality, said: “With businesses currently experiencing a record number of vacancies, our hope is that those seeking employment will consider the varied and exciting opportunities a career in hospitality offers.

Hide Ad

“In order to drive further job creation, we urge Government to implement a long-overdue reform of business rates and a permanently lower rate of VAT for hospitality and tourism in order to help fragile businesses back on their feet.”

A message from the Editor:Thank you for reading this article. We're more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers.

Hide Ad

If you haven't already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription.

Comments

 0 comments

Want to join the conversation? Please or to comment on this article.