The coronavirus pandemic crisis has led to mass unemployment in the UK. The Treasury Select Committee has warned that the risk is now of long-term unemployment with many firms going without support. MPs have suggested of targeted extension of the Furlough scheme to avoid mass unemployment in the country. But the committee added that a scheme’s blanket retention might not be such a good idea for money value. The Treasury Committee has ensured that it would “continue to innovate in supporting incomes and employment.”
The Coronavirus job retention scheme is due to expire on October 31. The scheme has allowed workers placed on leave to receive 80% of their pay to a maximum of £2500 per month. As the scheme began to wind down in September, the firms had to pitch in and contribute to the scheme which was earlier paid completely by the government.
Prime Minister Boris Johnson had earlier ruled out the possibility of scheme extension beyond October. He said that it would only keep people in “suspended animation.” Chancellor Rishi Sunak to has ruled out the scheme extension. He said that firms will still be given £1000 per furloughed employee still in employment till January end.
Mel Stride, Treasury Committee chairman has said that Chancellor must consider carefully targeted extensions of the scheme. “The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy,” he said.
The MPs said that people must be provided a provision to reskill. Also, small businesses should participate completely in the government’s Kickstart Scheme, which is aimed at creating work placements on universal credit for young people. The Federation of Small Businesses (FSB) trade body said that as the furlough scheme is heading towards expiry, “policymakers will need to look closely at measures to stem mass unemployment, including a successor scheme.” FSB’s national chairman Mike Cherry said, “The priority should be protecting viable small businesses, and all the jobs they provide, that have been disproportionately hit by the coronavirus crisis, including those caught by local lockdowns, subject to continued national restrictions, or with staff that has directly suffered because of COVID.”
UK’s unemployment rate has consistently been at 3.9% since the beginning of lockdown. But the Bank of England has projected that this rate will double to 7.5% by end of the year. This is when the support schemes which are government-funded will come to an end.
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