From left: Carolyn Fairbairn of the CBI, Chancellor Rishi Sunak and Frances O'Grady of the TUC [Credit: PA Media]
From left: Carolyn Fairbairn of the CBI, Chancellor Rishi Sunak and Frances O’Grady of the TUC [Credit: PA Media]
Chancellor Rishi Sunak has announced a new plan aimed at reducing further unemployment this winter following the end of the furlough scheme in October, with the government promising to top up the wages of ‘viable jobs’.

The new plan comes amid mounting pressure from various trade bodies to extend or replace the furlough scheme which has proved a lifeline for many businesses and helped prevent a flood of unemployment.

It comes as the prime minister unveiled a raft of new coronavirus restrictions earlier in the week as cases of coronavirus rapidly rose over September, forcing the government to raise the COVID alert level from three to four.

Concerns of the furlough scheme cliff-edge

Set to close at the end of October, the end of the government’s furlough scheme had seen predictions of unemployment skyrocketing if there was no measure to soften the blow.

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According to the Office for National Statistics (ONS), there were still around 2.2 million people still on the furlough scheme at the start of September – around 10 per cent of the private sector workforce.

In August, the Bank of England in its Monetary Policy Report predicted unemployment was set to hit 7.5 per cent by the end of the year, a substantial jump from the current 3.9 per cent rate in August.

Now, with the UK teetering precariously close to a second lockdown, the chancellor has confirmed that the jobs support scheme will come in place of the furlough scheme from the start of November.

The new ‘Jobs Support Scheme’

Set to last for six months, the scheme will see the government directly support the wages of people in work, topping up salaries to support what it describes as ‘viable jobs.’

Speaking to the House of Commons today, Sunak said the scheme is designed to aid companies to employ people on shorter hours, rather than laying them off.

The scheme is open to all SMEs – regardless if they have used the previous furlough scheme or not – and to be eligible, employees must work at least a third of normal hours and be paid by their employer for those hours.

In turn, the government will cover a remaining third of the employee’s salary – meaning an employee will receive two-thirds of their usual salary.

For larger businesses, Sunak stated that the scheme will only become available when their turnover has fallen.

The chancellor also confirmed that the scheme will be open to any individual who, as of yesterday, was in employment.

In addition, employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention Bonus, incentivising companies to bring back more furloughed workers.

According to the chancellor, self-employed traders will also receive support throughout the winter, with an extension of the existing self-employed grant scheme on similar terms and conditions as the new Jobs Support Scheme.

The Coronavirus Job Retention Scheme

Introduced on the 20th March, the Coronavirus Job Retention Scheme was the most costly and unprecedented intervention taken by the government during the initial outbreak, effectively paying the wages of workers unable to work due to the pandemic.

Under the scheme, the government paid 80 per cent of the wages of workers placed on furlough, up to a maximum of £2,500 per month.

According to the ONS, at the schemes peak in May, 30 per cent of the entire UK workforce was furloughed while in August, the total value of all furlough claims was £37.5 billion.

In June, the chancellor adapted the scheme, bringing in a flexible element, alongside outlining the winding down of the scheme which would see companies increasingly contributing more to the wages of furloughed workers before closing in October.

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