Chancellor’s furlough silence leaves four million workers in limbo over festive season

Thursday, 17 December 2020 10:33

Embargoed until 2230 Hrs Friday 18th December Labour today accused Chancellor Rishi Sunak of leaving almost four million workers in limbo over the festive period - after he failed to spell out the future of the furlough scheme ahead of another key redundancy deadline. Labour's Shadow Chancellor Anneliese Dodds said leaving businesses in the dark about how much the scheme will cost them in the new year risked plunging Britain into a “jobs nightmare before Christmas”....Request free trial

Embargoed until 2230 Hrs Friday 18^th December

Labour today accused Chancellor Rishi Sunak of leaving almost four million workers in limbo over the festive period - after he failed to spell out the future of the furlough scheme ahead of another key redundancy deadline.

Labour's Shadow Chancellor Anneliese Dodds said leaving businesses in the dark about how much the scheme will cost them in the new year risked plunging Britain into a “jobs nightmare before Christmas”.

The Chancellor has said he will review employer contributions to the scheme in January.

But UK employers seeking to make more than 100 staff redundant must issue notices at least 45 days in advance, so required clarity over future contributions no later than today (Friday 18 December).

With many businesses still likely to be under real pressure at that point, any rise in the cost of furloughing staff after January 31 could mean they have to let people go.

The silence from the Treasury means businesses have no idea how much they’ll have to pay into the scheme from 1 February,leaving almost four million furloughed UK workers facing an uncertain Christmas as the Chancellor’s latest cliff edge approaches.

According to Office for National Statistics (ONS) figures published on Tuesday, redundancies soared to a record 370,000 during the three months when the Chancellor was pushing ahead with his one-size-fits-all withdrawal of the furlough scheme while ramping up its cost to business.

It means 1.3 million jobs have been lost across the UK since the Covid-19 crisis began. Several other records were broken, including:

Record redundancies in the North West, East Midlands, West Midlands, East of England, London, South East, South West and Scotland.
Record redundancies among people in every age group over 25
Record redundancies in the retail, hospitality, leisure and transport sectors.

September and October also saw the Chancellor repeatedly chop and change his plans to replace the furlough scheme before his eleventh-hour decision to extend it until next March.

That wasn't just too late for large employers who had to issue redundancy notices by mid-September, but also for small and medium-sized businesses who had to inform staff at least 30 days in advance in early October.

The Director of the independent National Institute of Economic and Social Research (NIESR) Jagjit Chadha has said that the uncertainty over the future of the furlough scheme meant “large numbers of people either lost their jobs or were not employed because employers didn’t have the comfort of knowing that the furlough scheme would be in place”.

Rather than learn from those mistakes, the Chancellor looks set to repeat them. His silence ahead of this week’s redundancy deadline risks more job losses down the line.

The UK has already gone through the worst recession of any major economy. Now the OECD predicts that the UK recovery will be slower than any other in the G7 group of advanced economies.

Anneliese Dodds said:

"The UK suffered the worst recession of any major economy because of the Chancellor’s irresponsible decisions.

“His constant chopping and changing during the autumn led to record redundancies because businesses couldn’t plan ahead. Now he’s making the same mistakes again.

“Large employers facing tough decisions about keeping staff on needed to know by today how much the furlough scheme will cost them next year. If they don’t, we’ll see more job losses as they let people go.

“Once again the Chancellor is leaving businesses in the dark and millions of furloughed workers in limbo. He’s risking a jobs nightmare before Christmas.”

Ends

Notes to Editors

Data released on the 17^th December by ONS shows that 15.5% of private sector employments remained furloughed in the two weeks to 29 November

https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/conditionsanddiseases/bulletins/coronavirustheukeconomyandsocietyfasterindicators/17december2020

Using the latest data on the total number of private sector jobs from the Annual Population Survey, covering the 12 months to June 2020, a proportion of 15.5% suggests that 3.9m private sector jobs remained furloughed over the two weeks to 29^th November

https://www.nomisweb.co.uk/

The Office for National Statistics labour market overview, UK: December 2020 shows the number of people reporting that they have been made redundant in the previous three months.
Between August and October 2020 redundancies increased by a record 217,000 on the quarter, reaching a record high of 370,000

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/december2020

Between August and October 2020 the number of people reporting that they have been made redundant in the previous three months is shown by region below:

Column A – Region	Column B - redundancies
South East*	61,000
London*	48,000
East of England*	43,000
West Midlands*	40,000
North West*	36,000
South West*	33,000
Scotland*	30,000
East Midlands*	30,000
Yorkshire and Humber	17,000
Wales	13,000
North East	12,000
Northern Ireland	6,000

*denotes a record number of redundancies over the three month period

There were also record redundancies in the following age groups:

35-49: 11 per 1,000 employees
50+: 13 per 1,000 employees

And the following industries:

Wholesale/retail: 19 per 1,000 employees
Accommodation and food services (hospitality): 28 per 1,000 employees
Other services (things like leisure and arts): 33 per 1,000 employees
Transport and storage: 14 per 1,000 employees

Source for redundancies by region, age group and industry:

https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/redundancies/datasets/redundanciesbyindustryagesexandreemploymentratesred02

At the Summer Statement on 8 July, the Chancellor announced plans to wind down the Coronavirus Job Retention Scheme (CJRS) by the end of October, with increased employer contributions from August. He said: “Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before”: https://www.gov.uk/government/speeches/a-plan-for-jobs-speech
On 24 September, he introduced a new Job Support Scheme to replace furlough: https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan
He changed it twice on 9 and 22 October before it was abandoned altogether on 31 October, just before the furlough scheme was due to end: https://www.gov.uk/government/news/job-support-scheme-expanded-to-firms-required-to-close-due-to-covid-restrictions; https://www.gov.uk/government/news/plan-for-jobs-chancellor-increases-financial-support-for-businesses-and-workers
Announcing a new national lockdown on 31 October, the Prime Minister confirmed the furlough scheme would be extended until December: https://www.gov.uk/government/speeches/prime-ministers-statement-on-coronavirus-covid-19-31-october-2020
On 5 November, the Chancellor extended the furlough scheme until the end of March 2021. https://www.gov.uk/government/news/government-extends-furlough-to-march-and-increases-self-employed-support

Under the current iteration of the scheme, employers currently only pay National Insurance and employer pension contributions and the Government pays up to 80% of wages up to £2,500 a month. The Chancellor has pledged to review the CJRS again in January “to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions”: https://www.gov.uk/government/news/government-extends-furlough-to-march-and-increases-self-employed-support

On 2 December, Professor Jagjit Chadha (Director at National Institute of Economic and Social Research) gave evidence to the Treasury Committee, where he said:

“If I just go back a step in answering that, what we will see when the history books are written is that we had the furlough scheme in place for a year or so and it will look as though that was something providing continuous support to the labour market over that period, but of course you and I know, as do the other members of the Committee and the other economists on this group, that, throughout the whole course of the furlough scheme, there was uncertainty as to whether or not it would remain in place. That means that, with the announcement in the middle of the year that it would end in October, large numbers of people either lost their jobs or were not employed because employers did not have the comfort of knowing that the furlough scheme would be in place. This is absolutely a clear illustration of how uncertainty over policymaking can limit its effectiveness.”

https://committees.parliament.uk/oralevidence/1341/pdf/