Consider targeted extensions to Furlough Scheme

The Treasury Committee has said that the government should consider a targeted extension of its furlough scheme to prevent mass long-term unemployment.

Although it said that a blanket retention of the scheme would not be good value for money, the Treasury said it would ‘continue to innovate in supporting incomes and employment’, saying that the coronavirus crisis risks mass long-term unemployment and viable firms could go under without support.

The Coronavirus Job Retention Scheme, under which workers placed on leave have received 80 per cent of their pay up to a maximum of £2,500 a month, is due to end on 31 October.

Prime Minister Boris Johnson has previously said that extending furlough past October would only keep people ‘in suspended animation’, with Chancellor Rishi Sunak also ruling out an extension, instead saying that firms will be given £1,000 for every furloughed worker still in employment at the end of January.

Mel Stride, chair of the Treasury Committee, said: “The committee’s disappointment that the government did not implement our recommendations to help those who have fallen through the gaps in support persists. Our second report of the inquiry focuses on emerging challenges as lockdown measures are lifted.

“One such challenge is to target assistance effectively at those businesses and individuals who need it. The Chancellor should carefully consider targeted extensions to the coronavirus Job Retention Scheme and explain his conclusions. The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy.

“This requires a very difficult set of judgements; it is where careful analysis and creative thinking will be critical. As the committee has said throughout the crisis, the Chancellor must continue to show flexibility in his approach. We hope that the Treasury’s unwillingness to implement the recommendations from our first report is not a sign of how it will respond to this one."

In the second report of its inquiry into the economic impact of coronavirus, the committee also warned that the pandemic risked widening the gender pay gap due to the differences in hours of paid work in lockdown - especially if work patterns are changed permanently.