Sunak to announce replacement for furlough scheme as he cancels budget

Marco Green
September 24, 2020

Businesses across the United Kingdom have been demanding action as the furlough scheme comes to an end: tomorrow Rishi Sunak will announce what he can offer to ease the pressure on firms - especially in areas like hospitality and travel - who fear they will struggle to make it through the winter.

Bank of England governor Andrew Bailey said on Tuesday it was time to "stop and rethink" the furlough scheme in favour of a targeted approach.

The new plans could see the government and companies to share the cost of topping up wages for those who can only work part time, amid the pandemic.

Opposition and business leaders have been urging the chancellor to extend the job retention scheme in some form to avoid a "cliff-edge effect" they fear could cause a "tsusami of job losses", particularly as new coronavirus restrictions hamper economic recovery.

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.

His move comes after increasing pressure from business groups, MPs and unions to extend the furlough scheme as stricter restrictions are introduced.

According to the FT, the extension is set to include the Future Fund, a support programme that could see the Government take stakes in scores of fast-growing start-ups forced to take state-backed convertible loans.

The scheme would be aimed at businesses who can afford to employ staff for at least 50 per cent of their normal hours.

The Treasury declined to comment, while Number 10 also refused to be drawn on Mr Sunak's plans.

When asked if the government was considering the German-style short working hours scheme, Boris Johnson's spokesman said: "We've always said we would keep our support under review and it would be adapted as the circumstances evolved".

After Sunak held talks with businesses and unions he is considering paying the wages of workers for short-time working in a scheme similar to Germany's Kurzarbeit ("short work") system, the Guardian and other media reported.

More than £13 billion has been handed to firms and workers through five different Government support schemes in the last month.

Sunak is up against time to come up with new measures with businesses likely to start job cuts at the end of September to trigger a 30-day consultation period that would end with the furlough programme.

The most recent official figures show around 5 million people were still relying on the job support programme for some or all of their income at the end of July, concentrated in the hospitality and entertainment sectors.

Other reports by Click Lancashire

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