07 Aug Chancellor: There is hardship ahead for many people as furlough ends | Business News
The chancellor has warned there is hardship ahead for many people as the furlough scheme winds down over the next few months.
Rishi Sunak told Sky News that ending the scheme was “one of the most difficult decisions I’ve had to make in this job”.
He added: “If you look at it from start to finish, the government will have been stepping in to help pay people’s wages for almost eight months – an extraordinarily long period of time.
“I think most reasonable people would look at that and say that’s not something that’s obviously sustainable in the long run.
“In common with many other countries around the world – their versions of this are all coming to the end towards the end of this year.”
Under the furlough scheme, the government has covered 80% of staff salaries up to £2,500 each month since March – but that support is decreasing ahead of the scheme’s end in October.
From August, employers must pay national insurance and pension contributions for their employees.
In September, companies will have to pay 10% of furloughed employees’ salaries, rising to 20% in October before the scheme finishes.
The scheme was aimed at keeping as many people in employment as possible while the economy worked its way through the worst of the coronavirus pandemic.
There have already been at least 106,000 job cuts at major businesses since the UK lockdown began on 23 March, according to figures recorded by Sky News.
Mr Sunak said: “I don’t think it’s fair to extend (furlough) indefinitely. It’s not fair to the people on it. We shouldn’t pretend there is, in every case, a job to go back to.
“This is what we need to do now, it’s to look forward, provide the opportunities for tomorrow. Yes, there is hardship ahead for many people, we know that, but they shouldn’t be left without hope.”
Sky’s business presenter Ian King said the chancellor’s words on the furlough scheme were not surprising, describing the “damage done to the public finances” as “far in excess of anything we saw in the aftermath of the financial crisis”.
He said: “It is really unsustainable to carry on borrowing money and chucking money at the economy in this way.
“I think there is acceptance on the part of employers and a lot of workers as well that you cannot keep the furlough scheme going indefinitely.
“There was always a suspicion in people’s minds that the scheme was probably putting off the date when some people will lose their jobs anyway and I’m afraid this is very likely to happen.”
Mr Sunak also spoke about the government-backed loans given to businesses to help them survive the pandemic, saying he is optimistic that a lot of them will be repaid.
However, he admitted some will need to be written off.
He said: “I remain optimistic that if we can actually drive our economic recovery forward then, we should be able to recover a lot of the loans.
“Are some of those loans going to be written off? Absolutely. We’ve been very clear we won’t be able to save every single job, every single business.”