Chancellor hails sharp fall in furlough numbers as scheme starts to wind down
The number of workers on furlough has fallen by nearly 1.2 million in a month according to official figures published just as the scheme starts to wind down.
Data from HM Revenue and Customs (HMRC) showing 2.4 million people were using the coronavirus job retention scheme at the end of May, down from 3.5 million at the end of April, was hailed as “fantastic” by Chancellor Rishi Sunak.
The biggest reduction came in “beverage serving” businesses, where nearly 180,000 went back to work, while “restaurants and mobile food service” firms saw a drop of 133,000 on furlough.
Rishi Sunak said the scheme was naturally winding down as the economy reopens
However, there was a warning from one think-tank that more jobs than expected were still relying on the scheme.
Labour and the trade unions have reiterated fears that the withdrawal of furlough and other business support could threaten jobs and dampen the UK’s recovery.
The decline in the number of people on furlough – a government subsidy paying 80% of wages for those temporarily laid off – came as restrictions on retail and hospitality were eased in April and May.
Nearly nine million people relied on the scheme at its peak in May last year.
The chancellor said: “It’s fantastic to see so many people coming off furlough and into their workplaces with our restaurants, pubs and shops reopened.
“These figures show what we always hoped would happen – that the scheme is naturally winding down as the economy reopens, but continuing to support those businesses and employees that need our help.”
UK’s furlough scheme starts to wind down
The Treasury also pointed to estimates out today from the Office for National Statistics (ONS) suggesting that the number had slipped even further, to between 1.3 million and 1.9 million, in June.
The figures come as the scale of support for afflicted businesses starts to be curtailed – even though some, such as nightclubs, pubs and travel firms continually to be subject to severe limitations on trading.
It means that from today, the government will only pay 70% of wages to furloughed workers, with employers having to top up another 10% – and the support tapering off until the scheme finishes for good at the end of September.
Another limb of support for struggling operators – business rates relief for those in the leisure, hospitality and retail sectors – is also starting to be pulled away today, falling from 100% relief to a 66% discount.
The Resolution Foundation said the HMRC figure showing 2.4 million furloughed at the end of May was worse than an earlier estimate by the ONS that the number would have dropped to 1.7 million.
Nightclubs remain shut
Daniel Tomlinson, senior economist at the think-tank, said it offered a “sobering reminder of just how incomplete our COVID recovery is”.
He added: “With the furlough scheme starting to be phased out today, the government must do all it can to prevent a big rise in unemployment this autumn – particularly for those who have spent long periods not working during the pandemic.”
Business groups have warned that thousands of jobs in the worst-hit parts of the economy are at risk as a result of support measures not being extended further.
Labour has estimated that 375,000 firms will be affected by the tapering of business rates relief and 450,000 by the tapering of furlough.
Gary Smith, general secretary of the GMB trade union, said: “Ending the furlough scheme too quickly could kill a recovery before it even starts.
“Ministers are seriously misguided if they think we can suddenly revert to business as usual.”