Rishi Sunak warned winding down furlough scheme risks mass job cuts

Opposition parties have called on the Chancellor not to roll back the government’s flagship coronavirus job retention scheme after ministers said the public had to be “weaned” off the multi-billion pound wage guarantee.

There are concerns over the cost of the programme, with latest government figures showing 6.3 million people have been furloughed and are having up to 80 per cent of their salaries paid by the Treasury at a cost of £8 billion.

Reports suggest Rishi Sunak will announce plans next week to wind down the scheme from July, with options including cutting the subsidy level and lowering the £2,500 cap on monthly payments.

Treasury sources insist that “no decisions have yet been taken” on the scheme, which was introduced to prevent firms from laying off thousands of workers during the lockdown.

Chancellor Rishi Sunak announcing the furlough scheme in March. Picture: Getty Images

But a senior government source was quoted in the Times suggesting that “people are addicted to the scheme”, adding: “We’re not talking about a cliff-edge but we have to get people back to work.”

And Health Secretary Matt Hancock said the government must “wean” businesses off the scheme “as the economy gets back on its feet”. Angela Rayner, Labour’s deputy leader, criticised Mr Hancock and the government source for using “dreadful terms” against “workers who through no fault of their own have been told to stay away from work” during the pandemic.

Labour leader Sir Keir Starmer called on the government to set out the next steps for the scheme, describing it as “a lifeline”.

“It’s important that that scheme is in place. The government does need to provide clarity about the future status of that scheme,” Sir Keir’s spokesman said.

“What we’ve said is that the government should allow for greater flexibility for businesses, with some staff able to semi-furlough to ensure they do not face a cliff-edge when the scheme comes to an end.”

The SNP’s Treasury spokeswoman at Westminster Alison Thewliss said: “Rather than rolling back and winding down the government’s job retention scheme, the Chancellor must instead look to strengthen the measures and address the gaps in support so no one is left behind or pushed further into hardship. For the Health Secretary to talk about weaning off struggling businesses is deeply concerning.

“With HMRC revealing that over 800,000 companies – over six million workers – are applying to use the scheme, it’s vital the UK government does not take premature steps to wind down measures.”

At PMQs, Boris Johnson was told by Labour MP Justin Madders that it would be an “obscenity if, whether through employer decisions or government inaction, those people whose jobs we have been trying to save end up redundant anyway”.

The Prime Minister said the furlough scheme “has been one of the outstanding provisions that the government have been able to put in.

“Obviously, we want to make sure that people continue to feel that security, but at the same time, we also want to enable people safely and securely to go back to work and earn their pay packets, as they want to do.”

Mr Sunak has acknowledged the current level of expenditure is not “sustainable” in the long term but promised there will be no “cliff-edge” cut-off.

Speaking this week, he said ministers were investigating ways to wind down the scheme, due to run to the end of June, in a “measured way”.

The Liberal Democrats have called for a “tapered” end to the programme, with the Treasury paying 50 per cent of salaries for the first month after people return to work, falling to 30 per cent after the third month, with employers picking up the full bill after the fourth.