Unions and business chiefs call for new furlough plan to avoid mass unemployment

More than 2m workers are still thought to be furloughed, but the scheme is due to end next month

Rishi Sunak should extend furlough or offer a robust alternative to avoid mass unemployment from November, companies say
Rishi Sunak is under pressure to extend the furlough scheme or replace it with a new, targeted version, when the job support expires at the end of October

Britain needs a new furlough programme to avoid a “cliff edge” surge in unemployment when the Job Retention Scheme ends next month, according to business groups and unions.

Government support for the pay of employees who are staying off work is being cut back gradually in September and October, but comes to an end beyond that point.

The Confederation of British Industry (CBI) wants a replacement scheme brought in to support struggling companies to bring back staff on at least a half-time basis, with the Government chipping in to top up wages.

“We need something to bridge us to the other side of this crisis,” said Rain Newton-Smith, the group's chief economist.

The ONS estimates that 11pc of private sector employees are still on furlough, down from a peak of almost one-third.

“That is too many at this stage, given the weak demand we are seeing in so many parts of the economy, to put at risk of unemployment,” she said.

It comes at a time of growing fears of new lockdowns, which would further harm the economy.

The CBI wants workers who come back for at least 50pc of their usual hours, paid for by their employer, to get an added subsidy from the Government.

The Trades Union Congress said it wants a new “job protection and upskilling scheme” with similar characteristics, for businesses which are still suffering from the pandemic, for instance with local lockdowns or severe limits on capacity.

Kate Bell at the TUC said this could require them to take workers back for at least 10pc of usual hours, as well as blocking dividends and redundancies.

“This is an opportunity to up-skill our workforce. People who are working less than 50pc of their time should be offered a funded offer of training from the Government,” she told the House of Lords' Economic Affairs Committee.

“The Government has talked about a national skills fund. We think this is an opportunity to bring that spending forward.”

The support has been been powerful, if expensive. The JRS and business loan schemes have prevented more than one in 10 companies from facing a cash flow crisis since March, according to thinktank Onward. 

It came as the BBC found employers planned more than 300,000 redundancies in June and July, according to Insolvency Service filings, underlining the extent of the risk to jobs.

The Recruitment and Employment Confederation and KPMG said hiring started to recover last month, with particularly high demand for temporary staff. But demand for workers is struggling to match the pace of redundancies, so wage expectations are falling.

Meanwhile the Institute of Directors called for an extension of emergency measures that suspend the usual rules forcing companies to cease trading if they face insolvency. These are due to expire at the end of this month, and the business group wants the deadline to move to the end of the year.

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