The Coronavirus Job Retention Scheme will cost an estimated £30bn to £40bn over the three months it is set to run, according to the Resolution Foundation think tank.
While the Treasury has suggested that only 10% of employers have taken up the scheme – also known as furlough – a survey today from the British Chambers of Commerce (BCC) suggests that 37% of respondents plan to furlough between 75% and 100% of their workforce over the next week.
The job retention scheme means companies can place staff on furlough for a period of at least three weeks and claim 80% of their wages (up to £2,500) to be reimbursed by the government. The scheme is backdated to 1 March and will initially be open for three months.
The Resolution Foundation estimates that if this pattern of adoption continues, around a third of private sector employees (8 to 11 million) will be furloughed. And if businesses are unable to reopen and redeploy staff beyond the end of May, the cost will be even higher.
Torsten Bell, the organisation’s chief executive, said: “By subsidising up to 80% of workers’ wages, the scheme will help millions of workers who would otherwise face catastrophic hits to their living standards. The cost of the scheme depends on firms’ take-up and the length of time workers need to be furloughed for.
“But with recent surveys implying that at least a third of the private sector workforce could be paid through the scheme, it is likely to cost as much as £30bn to £40bn over three months. The economic and social cost of mass unemployment in the absence of such a scheme would be far, far greater.”
The BCC’s Coronavirus Business Impact Tracker has also found that many businesses are struggling to access the government’s package of emergency loan and grant schemes. Only 1% of respondents had successfully accessed the Coronavirus Business Interruption Loan Scheme, it said.
The percentage of employers looking to furlough all of their staff has also increased, the BCC found, from 17% last week to 20% this week.
Director general Dr Adam Marshall said: “Our latest data shows that many businesses face a cliff-edge scenario, either at the end of this month or over the course of the next quarter.
“We’ve seen a big jump in the number of firms furloughing staff, and many are now starting to apply for access to government loan and grant schemes to keep themselves afloat. Our research suggests that support is only starting to reach firms on the ground.”
In response, HM Treasury pointed out that there has not been any official estimate of the full cost of the scheme yet, and that the number of employees to take up the scheme remains uncertain.
A spokesperson said: “The purpose of the Coronavirus Job Retention Scheme is to keep people in employment, protecting people’s jobs and incomes and reducing long-term damage to the economy.”