Chancellor Rishi Sunak should establish an independent commission to explore what additional support organisations need as the furlough scheme is withdrawn, the Liberal Democrats have said.
In a letter to Sunak, Lib Dem treasury spokesperson and MP for Edinburgh West Christine Jardine warned that plans to withdraw coronavirus support measures including furlough presented a “cliff edge” for businesses and would result in financial hardship.
Any individual left on furlough on 30 September, when the Coronavirus Job Retention Scheme ends, is likely to become unemployed, the letter says, and will also be “kicked when they’re down” when the government removes the £20 per week Universal Credit uplift at the same time.
Numerous organisations have warned the government of the looming unemployment crisis, with 1.9 million people still on furlough at the end of June.
The British Chambers of Commerce this week suggested that one in five employers were considering redundancies, while the New Economics Foundation has estimated that 660,000 people will still be furloughed at the end of September.
Jardine’s letter says: “The UK economy has fared worse than any other G7 country during the pandemic. It is not a record to be proud of. Businesses need certainty if they can plan effectively for their future.
“It is therefore imperative that you react quickly to establish a commission that can provide answers that every business using the Job Retention Scheme and every individual on furlough needs. Hundreds of thousands of families need a change of strategy.”
It recommends that the commission should:
- research exactly how many people are still on furlough and how many people are expected to lose their jobs as the scheme is tapered and then withdrawn as planned
- propose measures to support businesses and individuals
- look at whether policies and strategies are needed to help the economy recover fully.
Meanwhile, the New Economics Foundation has recommended that the government extends and redesigns the furlough scheme as a new, permanent, short time working scheme for employers to lay off staff in response to future economic shocks. This would bring UK policy into line with other European nations, it said.
Alex Chapman, senior researcher at the think-tank, said: “The current end date for the furlough scheme is arbitrary and can cause unnecessary harm to thousands of workers across the UK, by risking unemployment or facing a reduction in pay. Our analysis highlights that demand will remain suppressed because of voluntary measures that the public will take in response to the uncertainty around the delta variant.
“The furlough scheme has been a necessary lifeline for millions of workers, and we strongly urge the chancellor to retain it beyond September. Over time, similar to some of our European neighbours, a more permanent furlough scheme should be introduced that can help the British workforce build resiliency against future economic shocks such as climate disruption, trade realignment and other public health emergencies.”